The five-year aggregate industry outlook

Construction activity remains positive due to the continued expansion of the economy.

It’s amazing both are still positive after 10 years.

Of course, the outlook is mixed. The economy is slowing, construction gains are small, and the political environment is toxic. And we haven’t even mentioned trade or the Middle East.

There are two keys to stay on a positive path forward: inflation remains low and the current pro-growth policies continue. If either condition changes, the impact on construction will be negative.

Indicators

For more than 50 years, people have been moving from the Northeast and Midwest to the Sun Belt. Even though overall population growth is slowing, migration flows remain strong.

This pattern continues at the same pace – or at a somewhat higher pace – given the tax disparity among the states. A slight change is that more people are only going as far south as Tennessee and North Carolina. In many ways, Nashville reminds us of Atlanta 50 years ago. It’s a growing international destination for business.

Our expected county-by-county change over the next five years reflects movement from the North to the South and Mountain states. The Farm and Energy Belts, with the exception of Texas, continue to hollow out.

Rural communities are fighting back by offering incentives to new workers from other areas. As long as they can provide fast internet speeds and cheap housing, their strategy may work. Keep an eye on this trend, as it may show up within the numbers in a few years.

Mortgage rates are incredibly low. Only people over 40 recognize this. To younger people, this is normal.

Low mortgage rates, along with growing incomes, are starting to show up in housing demand, which is stronger. The impact is small yet a positive development, and housing will become even stronger in a few years.

Combined, all of these factors lead to slower economic growth. Because we are at full employment, some of this is to be expected. But productivity growth and capital investment, while higher, have not grown fast enough to make up for slower job gains.

Economic summary

As we look out to 2024, here are some of the key trends to keep an eye on:

1. Population growth is slowing and will average near 0.5 percent year-over-year for the next five years.

2. Migration patterns will favor the Sun Belt and Mountain regions.

3. State tax differentials will become even more important for location decisions.

4. GDP growth will average near 2-plus percent per year through 2024 – if policies don’t change.

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David Chereb is executive vice president and chief economist at S-C Market Analytics, which produces customized market forecasts by major segments of construction, from the county level up.