It seems crazy that a flu like virus can bring global economies down, but it has. Whether you believe this is an overreaction to the flu, or not, no longer matters as economies globally are closing borders, beaches, cancelling group events and now forcing the closure of not critical infrastructure businesses and operations.
Just 4 days ago, restaurants here in Denver, CO were ordered to close for 8 weeks, following the lead from California and New York. Earlier in the week UK Contractor associations are forecasting a site wide construction shut down, which could last for up to 3 months.
Just yesterday here in the US, the Pennsylvania Governor ordered a complete stop work on construction projects which is in effect now and until further notice…
It is very possible that other states here in the US will follow and we can very likely see many regions across the country where construction is forced to close, but we’re not there yet.
The impact to the small & medium contractors is sure to be huge, but we’ve seen this before… The 2008/09 GFC hit construction hard. Dropping construction starts by over 50%.
The NAHB estimates that approximately 40% of GDP is on pause or partial pause (keep in mind that about one-third of the economy is housing and healthcare alone). The second quarter forecast is expected to be minus 11% GDP growth rate, which would be the largest decline in decades for a single-quarter. The third quarter is likely to post a negative growth rate as well, due to economic damage in the spring.
But, things recovered higher than before the GFC within 2 years. We don’t yet know what the impacts from the Corona Virus will be to construction, but it’s time to prepare. Given the strength of the Construction sector going in to this economic "pause", it's likely we will be a driving for behind the economic return and we expect to come back strong in the summer period.
While we are forecasting declines for housing construction on net in 2020 (and particularly in the spring), housing was on solid footing coming into the year. Home builder confidence, as measured on the NAHB/HMI, registered a slight decline in March to 72, although we clearly expect declines in April. Single-family starts over the last three months reached post-recession highs when adjusted for seasonal factors. With low interest rates and policy help for the labor market, housing clearly would be a sector to lead the economy into recovery after the declines of mid-2020.
Here at Takeoffs.io we’re still working to do your takeoffs and estimates, most of the team is now working remotely, but we’re here.
We have also extended our Material Pay beta release, which offers up to 90 days on all materials purchased through our platform. If this extra cash flow could be critical to your business, then please reach out and we will do what we can to get you access. You can find out more here: https://tools.takeoffs.io/material-pay/
We’ll provide more updates as we get them.