AGC released employment data last week that underscored the need for speedy distribution of stimulus funds.  According to AGC's chief economist Ken Simonson, construction employment fell in 288 of the nation's largest 311 metro areas from April 2008 to April 2009.A detailed chart of the data by area is available here.  A variety of media outlets covered this news, including the Austin Business Journal and the Associated Press.For more information, contact Ken Simonson at (703) 837-5313 or simonsonk@agc.org.

More and more construction firms report winning stimulus contracts that are enabling them to add employees and avoid expected layoffs. But the stimulus money is not enough to overcome the fall in private and state and local-funded projects. Meanwhile, the Buy American provision in the American Recovery and Reinvestment Act (ARRA) threatens to undercut the job gains.The Bureau of Labor Statistics reported on June 5 that construction employment fell by 59,000, seasonally adjusted, in May. Dismal as this number sounds, it was only half as great a job loss as in recent months. Recent job losses in residential construction, while still proportionately worse than in nonresidential construction have been moderating. Within a few months it is likely that homebuilding will stop falling and begin to add workers.Unfortunately, the downturn in nonresidential construction is likely to worsen for the rest of the year. As private projects wrap up-or get scaled back or halted in midstream-contractors have been unable to pick up new customers. And state revenue forecasts keep deteriorating, triggering further slashes to public construction budgets.A steady flow of stimulus money is showing up in highway projects. Water and wastewater construction grants looked promising as well. But some of these projects are being held up by uncertainty over Buy American language. ARRA generally requires contractors to use only U.S.-made iron, steel and materials, and to certify that they have done so.Certain key water and wastewater equipment is available only from foreign suppliers. Other items come from a single U.S. source. In some cases, contractors cannot get a certification as whether all of the components of a piece of installed equipment are U.S.-made.These problems have reportedly held up some project awards and led other water and sewer agencies to forgo stimulus money altogether. In addition, Canadian municipalities have threatened to retaliate against cities that use Buy American to keep out Canadian-made items. This step could escalate to a full-blown trade war that would lose jobs for contractors and many other businesses.AGC is pressing federal agencies to provide clarifications and waivers in order to enable stimulus to achieve its intended goal of putting people to work quickly.Please email simonsonk@agc.org if you have an example of a stimulus project that has been held up or made more expensive by Buy American provisions.

On May 19, I had the privilege, along with a handful of other members of the National Association for Business Economics, to brief Federal Reserve Chairman Ben Bernanke and Governor Dan Tarullo on the state of the economy. Thanks to the feedback many of the 12,000 subscribers to the Data DIGest have provided to my "Questions of the Week," I was able to report that some of you are now receiving some stimulus contracts and have seen an improvement in the state and local bond market, but no loosening of credit for developer-financed construction projects.I also updated the governors and staff on the changes in materials costs in the year since I gave Chairman Bernanke a copy of the Construction Inflation Alert at the last Fed briefing I attended.Later in the week, I had a chance to speak with Austan Goolsbee, a member of the President's Council of Economic Advisers and staff director of the President's Economic Recovery Advisory Board, offering to supply information on stimulus contracts and hiring. Steve Sandherr also communicated with the Board about the progress of stimulus and the possibility of additional stimulus funding.Additionally, I met with the chief statistician of the U.S. and top officials at the Census Bureau, Bureau of Labor Statistics and the Bureau of Economic Analysis, providing each with suggestions of data that would be useful for the construction industry and for public agencies concerned about construction costs or jobs.AGC was the only construction-related representative in these meetings. In each of these cases, your feedback and suggestions enabled AGC to provide specific facts and ideas to better inform policy makers. Keep those emails coming to simonsonk@agc.org!For more information, contact Ken Simonson at (703) 837-5313 or simonsonk@agc.org.

AGC's chief economist Ken Simonson explained in a statement that the recent Associated Press story on stimulus transportation funds fails to acknowledge several unique facts about the construction industry.  The AP story does not consider that construction jobs are not site-specific and that workers will spend income in their hometown, among other factors.

In a recent interview with Reuters News, AGC's chief economist Ken Simonson said that he expected growth in the second quarter due to a "sharp drop in business inventories."  The article, ISRI-Analysts see US economy bottoming, vary on how long, presented the views of several leading economists, and Simonson's outlook was the most positive.

It is growing more likely that real (inflation-adjusted) gross domestic product (GDP) will rise slightly in the quarter that began on April 1 from the dismal levels of the first quarter. The growth is likely to pick up gradually through the rest of the year. But it will be very uneven, unlike the downturn, which affected all sectors.Tax withholding was reduced on April 1 and unemployment benefits were increased and extended in duration. These factors alone may be enough to help raise consumer spending, which accounts for 70% of GDP. Federal government purchases of goods and services should rise enough to offset declining state and local spending as the stimulus outlays for construction begin. But business investment and net exports, the other components of GDP, may continue shrinking into next year.For the next few quarters, the only action in construction is likely to be in power (power plants, transmission lines, wind farms), military base realignment work and a growing number and variety of stimulus-funded projects. The next segment of construction to revive is likely to be single-family homebuilding, perhaps before the end of 2009. With 30-year fixed mortgage rates now at an all-time low of 4-3/4 percent and tax credits available from Uncle Sam and the state of California, more people will be able to afford homes.By early next year, retail construction should resume, although much of it will consist of renovating existing stores for new tenants.  However, other types of private, state and local-funded construction may remain dormant until late 2010 or beyond.For more information, contact Ken Simonson at (703) 837-5313 or simonsonk@agc.org.

AGC chief economist Ken Simonson spoke to Reuters reporters regarding construction job loss, which he expects to remain negative until the end of this year. Read the article here.

The San Diego Union-Tribune today covered AGC's 90th Annual Convention, which will close in San Diego on Saturday. In the article, AGC's chief economist Ken Simonson commented on the state of the construction industry and predicted a three to nine percent drop in nonresidential construction spending. Read the article here.

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.