Will February mark the low point in the economic cycle? Assuming President Obama signs the tax and spending relief package this month, and Treasury goes ahead with further banking and credit measures announced by Secretary Geithner on February 10, the economy will soon begin getting a strong double dose of stimulants.The fiscal stimulus should start flowing quite promptly. Within weeks, taxpayers will receive reductions in withholding, unemployment checks will be boosted, and individuals unemployed for more than six months will keep receiving checks longer. Meanwhile, consumers are already receiving the equivalent of hefty tax cuts through drops in interest rates and in gasoline, heating and other prices. The combination of these governmental and market changes may end the spending strike that has kept retail sales tumbling for three months. Already, the National Association of Realtors reported that its index of pending home sales-houses under contract but not yet closed-improved in January. That should translate into higher home sales in March, followed by a revival of housing-related purchases.Within a few weeks of enactment of the stimulus bill, the Federal Highway Administration and other agencies will notify state and local governments how much they will be eligible for under various infrastructure stimulus programs. Direct federal spending on construction will also begin to pick up.The rise in stimulus-induced construction will not be enough at first to offset the sharp cutbacks states are undertaking now to balance their budgets during the current fiscal year. But by the third quarter, public construction spending may level off.The stimulus bill will also help some categories of private construction, such as power, perhaps communications, and residential improvements (for energy efficiency). And tax incentives in the bill may help get private development off (or into) the ground in high-unemployment "recovery zones."But much private construction, as well as bond-funded public construction, will depend on the success of the Federal Reserve, Treasury and other financial agencies in restoring the banking and credit systems. The timing for that breakthrough remains uncertain.The media, policy makers from both parties, and economists will be watching closely for signs of a turnaround. You can help identify it. Send examples of either improvement in the demand for construction and availability of credit, or continued contraction, to simonsonk@agc.org.

Construction job gains were confined to only three oil-producing states - Oklahoma, Louisiana (both 4 percent) and Texas (1 percent) - plus the District of Columbia (2 percent). At the other extreme were Utah (-22 percent), Arizona (-21 percent), South Carolina (-17 percent), Florida and Michigan (both -16 percent). Some of these states posted double-digit construction job increases just a few years ago, whereas Michigan has been shedding jobs all decade. Even the states that are still in the plus column had much larger gains in most of 2008, showing how ubiquitous the construction slump has become.The stimulus bill that the House passed on January 28 would slow the hemorrhaging in every state and turn losses into gains in some places. A study prepared last year for AGC by Professor Stephen Fuller of George Mason University showed that $1 billion of spending on nonresidential construction would add or save 28,500 jobs economy-wide, including 9,300 construction jobs. The House-passed version of the stimulus bill would pump roughly $150 billion into construction over two years, saving or creating between 600,000 and 700,000 construction jobs. Additional construction jobs would result from tax provisions that would trigger demand for structures and from other tax cuts and spending that would strengthen overall economic activity.The Senate version of the stimulus bill would allocate spending somewhat differently but fund roughly the same amount of construction. Thus, either bill would provide a significant boost to construction - if the money is obligated quickly.A second problem dragging down construction has been the lack of bank credit for developers and access to municipal bond markets for public agencies. Some news reports suggest these markets have begun to re-open.AGC wants to hear your experience with credit availability. Please email simonsonk@agc.org to say whether you have seen greater, less or no change in availability of credit for construction in recent weeks.

Construction was on the bleeding edge of job losses last year. The Bureau of Labor Statistics reported on Friday that construction accounted for nearly one-quarter of the 2.6 million jobs lost throughout the economy in 2008, even though the industry employs only one out of 20 nonfarm workers.The industry has shed jobs for 18 months in a row, with losses accelerating rapidly from 20,000 in September to 101,000 in December. Further losses seem all but certain.Last month, 236 AGC members answered a short survey that asked about market conditions. AGC released the results on Thursday, January 8, coincidentally a few hours after President-elect Barack Obama urged Congress to quickly pass a stimulus bill containing large doses of spending on transportation, public building, power and other infrastructure spending.The overwhelming majority of respondents said they had seen or expect a downturn in the following construction markets: highway, 93%; building, 92%; utility, 84%; water resources, 78%; other public work, 91%; and private construction, 96%. Three-quarters of respondents had laid off workers in the past 6-12 months as a result of the downturn; the median response was about 30% of the workforce had been laid off. Nearly two-thirds expect further layoffs in the next 6-12 months.Underscoring the value of federal stimulus funding, 86 of respondents said that if their state received extra federal funding and therefore was able to put additional projects out to bid, they would avert layoffs and/or hire additional workers. Five out of six said they would be able to begin work within a month or less after being awarded a project. Most also said winning new projects would affect their decision to purchase new equipment.Thanks go to the many members who took the time to fill out the survey, providing additional detail on many of the questions. To see a copy, go to www.agc.org/survey_results.For more information, contact Ken Simonson at (703)837-5313 or simonsonk@agc.org.

On January 8, AGC hosted a media conference call with approximately 60 reporters to announce its first-ever construction employment and business forecast.  President-elect Doug Pruitt (Sundt Construction, Tucson, Ariz.), CEO Steve Sandherr, Chief Economist Ken Simonson and members Brian Burgett (Kokosing Construction, Fredericktown, Ohio), Tracy Hart (Tarlton Corporation, St. Louis, Mo.), Steve Kimball (Kimball Construction Co, Baltimore, Md.) and Don Weaver (Weaver Bailey Construction Company, El Paso, Ark.) outlined how under current market conditions almost two-thirds of commercial construction companies are planning to lay off workers this year.   Several media outlets covered the event and survey data, including Fox Business News, Associated Press, Reuters and Wall Street Journal. For a sampling of media coverage of the event, click here.

Two charges against providing economic stimulus through infrastructure spending are that it leads to little employment, and that the money flows too slowly to help during a downturn. Recent estimates from the Federal Highway Administration (FHWA) and the U.S. Army Corps of Engineers show the job potential is large. The circumstances of the current recession suggest the jobs would be added quickly.

Voters on Election Day approved a huge schedule of state and local bond and tax issues in support of infrastructure spending for schools, colleges, other public buildings and highways. The Bond Buyer estimated that successful bond issues alone totaled $54 billion, the second-highest total after 2006 and about 82 percent of issues on the ballot.

The freezing of credit markets, combined with sharply reduced expectations for the economy, are drastically lowering the number of construction starts. At the same time, the slowing world economy, along with a rebound in the value of the dollar against some currencies, has driven down many materials prices.

The upheaval on Wall Street is delaying or stopping projects all over the country, even ones already under way.