Economist expects recovery to continue into 2013

By |  December 11, 2012

In a 2013 construction forecast released Dec. 4, ABC Chief Economist Anirban Basu predicted nonresidential construction spending to expand 5.2 percent next year, with much of the expansion coming from privately financed projects.

“With the elections now behind us, the hope is the White House and Congress will be able to successfully navigate the nation past its fiscal cliff,” Basu says. “If that happens, the latter half of 2013 could be surprisingly good for nonresidential activity given the large volume of construction projects that were put on hold during the course of 2012. However, the baseline forecast calls for only moderate expansion in nonresidential construction spending next year.”

According to Basu, rising consumer confidence will lead to a 10 percent expansion in total commercial construction. He also noted the fastest growing major U.S. industry during the last year in terms of absolute job creation was professional and business services, and because many firms in this category use office space, office-related construction spending is expected to rise 10 percent.

In addition, power is likely to increase 10 percent, lodging 8 percent, health care 5 percent and manufacturing 5 percent.

As part of the overall economy, Basu says “whether or not the nation falls off its fiscal cliff – a collection of spending cuts and tax increases that kick in at the end of the year – certain taxes likely are headed higher.”

Specifically, Basu predicted increases in marginal income tax rates to pre-Bush levels, increases in tax rates on capital gains and dividend income, and expiration of the payroll tax credit in the first quarter of 2013.

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