Economic Forecast for Q2: What to expect

US OUTLOOK FOR 2017

The US economy is growing, and surveys are showing increased optimism from both consumers and small businesses.  Total Construction Spending rose 4.5% in 2016 and Disposable Income saw a 3.9% gain, positive signs of a healthy economy.  Most of this momentum should carry forward through the next quarter, as Retail Sales numbers are already showing a good start to the year.

While many signs are positive right now, there are still some concerning trends in new home-building that contractors should be aware of.  Despite a recent improvement in growth rates for most geographic markets for building permits, the longer-term trend is for softer conditions.  Interest rates are rising and existing home sales are no longer growing versus last year (-2.4%). As it stands now, the second half of 2017 may be weak for new construction.  

Contractors should look to take advantage of the near-term optimism by looking to expand and fill the pipeline as far out as possible.  Rising incomes should continue to bolster existing home renovation work, even if new-construction weakens throughout the year.

NORTHEAST REGIONAL OUTLOOK

The economic environment in the Northeast is generally positive. Contractors are facing improving Consumer Spending conditions (1.8%) and Housing Construction (6.4%).  Housing may cool as we move through 2017, but conditions are positive for now and that should present new opportunities for business.

CONSUMER SPENDING

The Northeast is familiar with trailing behind the rest of the US, but 1.8% is still an improvement on last quarter (0.7%), and generally a high enough rate-of-growth to sustain new job creation.

NEW HOUSING PERMITS

Permit levels can fluctuate widely in the off-season winter months based off of low volume and varying temperatures. The overall trend appears to be toward single digit year-over-year growth for the Northeast to kick off the spring construction season.

Written by: Andrew Duguay - Senior Economist - Visit www.prevedere.com to learn more. To see the PDF version of this forecast, click HERE.