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Outlook for Quarter 4 - 2017

US OUTLOOK - EARLY 2018

The US economy is gaining momentum and expected to close out the year onthe stronger side. A soft start to the year (1.2% GDP in 1Q) has given way to improvements in employment, retail spending and GDP (2.6%) in 2Q. Leading indicators such as Disposable Income and Job Openings signal the second half of the year and early 2018 should see ongoing growth.

For contractors, the health of the economy should translate into more demand. Prevedere’s Remodeling Index is showing 5.2% year-over-year growth. New Homebuilding has been more lackluster. Housing Starts in 2Q were only 0.6%above year-ago levels, part of a softening trend that has been going on for several quarters and our leading indicators suggest will continue in most states through the coming quarter.

In a reversal from earlier this year, wages are starting to grow at a faster pace and inflation has cooled. While this may mean employers will be faced with higher labor costs in 2018, it also means that consumers should be armed with more spending power to start next year as the paycheck grows faster than inflation.

NORTHEAST REGIONAL OUTLOOK

Economic activity in the Northeast is expected to be mild, but positive for the remainder of 2017 into 2018. For contractors more dependent on new construction, the outlook is a little more cautious as the trend of slower growth in the first half of 2017 has transitioned into year-over-year decline in many areas.

CONSUMER SPENDING

The Northeast market picked alongside the rest of the US and Canada in the summer months. This leading indicators suggest that consumer spending should continue to be positive to finish out the year.

NEW HOUSING PERMITS

Many States & Provinces simply can not keep up with last year’s strong growth rates and Permit levels have retreated. At this point, we see no signs of a major crisis, but a normal cyclical market correction that may take quarter or two to work out.

Written by: Andrew Duguay - Sr Economist - Visit www.prevederesoftware.com to learn more.