What Does Increased Economic Growth Mean for Construction Profits?
What Does Increased Economic Growth Mean for Construction Profits?
After years of slow economic growth following the 2007 economic downturn, the economy is finally showing sustained growth. Revenue numbers in the S&P 500 are now higher than they have been in years, and US consumer sentiment is at a 17 year high, topping even pre-recession levels of consumer confidence.
The Wall Street Journal speculates that this growth means corporate profits may begin to slow, due to increases in labor and material costs offsetting growth. As Economy Gains Strength, Companies Sell (and Spend) More
This presents an important question for the construction industry: Will we too see stagnating profits even the face of overall growth?
Without a crystal ball, it’s impossible to know. It is likely that a strong global economy will drive up the cost of materials, and right now, Europe is enjoying decent growth.
However, as everyone who’s worked construction knows, hiring construction workers is an entirely different ballgame from hiring accountants or salespeople. Often, traditional employment metics have little relation the nuts and bolts realities of our jobs, and the things driving up labor costs for Goldman Sachs don’t have much bearing on our lives.
Only time will tell, of course, but I predict that we’ll see construction profits continue to increase–good news for those of us who’re already working with tight margins!
