Industry outlook still positive despite corrections in the financial market

By |  March 22, 2018

While financial volatility has returned, economic growth has strengthened.

Rising interest rates are not a problem for the economy because they are being driven by higher growth. Volatility is not confined to the financial sector; both trade and innovation are adding to the uncertainty.

The rapid pace of innovation is and will be a major disrupter to the economy. This seems like an old story – innovation displacing workers and changing the list of winning and losing companies.

What is different is the pace of change. The move from agriculture to manufacturing and then to services took three to five decades per phase. The current wave is taking one decade.

We have no experience to guide us on whether the new jobs (i.e., computer programming, robotics, AI, telemedicine) will mainly offset the disappearing jobs, which are too numerous to list. I know it is unsatisfying, but as of now we just don’t know how it will turn out.

For the next few years, construction will remain healthy with nonbuilding providing the biggest boost for materials demand. With rising mortgage rates and rising home prices holding back any boom in housing, the biggest gainer for materials will come from nonbuilding. Regionally the gains will be widespread, with no region being left out. However, the big gainers are the sunshine states along with California.

The net result is that our outlook is little changed from the past few months, with small improvements for residential and smaller gains for nonbuilding.


Dr. David Chereb has many years of experience forecasting construction materials, and his web-based forecasting models have captured every major turning point in materials demand for more than 15 years. Chereb received his Ph.D. in economics from the University of Southern California. He can be reached at david.chereb@sc-marketanalytics.com.

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