Our tried and true friend, Ben Bernanke, has made some interesting comments about the state of our country’s economy at a time when the state of our economy closely resembles the state of a dead raccoon that two weeks ago ended up on the wrong end of a dump truck. Bernanke went on record saying that the global economy was emerging from recession.
But when Ben? When? Last time I checked (4 seconds ago), the US unemployment was at 9.7% and all projections that I have seen are showing unemployment to be over 10% through the first quarter of next year. I suppose GDP is a more accurate measure of economic growth, but without jobs, increased GDP will probably only help those of use that are lucky enough to be getting a pay check instead of ranting about the economy over a domain name they buy for $8.50 a month.
US unemployment rate actual Can A Journeyman Electrician Be Self Employed and forcasted:
The worst part about this situation is that, for those of us in the Construction Electrician Companies industry, an improved economy will not help us out too much until further down the line. In order to start a construction project, you must first get financing from the bank. The banks hold the cards like Chris Moneymaker in the World Series of Poker. And lately, they’ve been folding even with three of a kind before the flop.
So suppose you deal the bank a royal flush and they decide to wager a few chips on your project. The slow design and permitting process must then begin and nearly end before the drawings can go out for bid, contractors are selected, and the work actually gets going. This is what causes the “lag” in the construction industry as the economy improves.
But what about “shovel ready” projects? I think this term is misleading, and certainly over-used. Unless you are filling potholes, there are really few projects that are truly shovel ready. If plans have been shelved for several years, in the very least the existing conditions have to be verified and brought up to date. What construction has taken place since these plans were generated? Has there been erosion, or effects of weather? What maintenance issues from existing structures have arisen and now need to be dealt with? What code requirements have changed since the initial design? Are the LEED certification requirements the same as they were when the plans were generated?
All of this stuff takes time. So even with a project that was shelved for several years, we can’t just pick up the plans grab, our shovel and hard-hat, walk out the door, and start whislin’ Dixie.
The bottom line is that construction is a lagging beneficiary of economic growth, so if we are just now starting to show signs of activity in the economy, we may have quite a while before contractors start hiring again.
But have your shovel shined up because when it turns around, we’ll be diggin’ like there’s no tomorrow.
Construction