The reason we keep records is so that we can try to determine the risk behind the things we would like to do, in order to, “…head them (the risks) off at the pass’. Planning for a likely scenario helps one to be able to better insure a successful outcome. A variety of indicators from official sources gives us an ability to project the likely future of the architecture industry over the coming year.
Still
trudging along, the national economic picture for 2012 is not too encouraging.
The most recent information published from the United States Bureau of Economic
Analysis is from 2010. The information related to the economy and percentage of
the Gross Domestic Product (GDP) may be seen at this link. Because the information included in the statistics is either pictures
of the past or forecasts for the future, it is at best a ‘best guess’ of how
things are going. Essentially, the information shows that the Construction “Value
Added” category decreased by 3.7% for the sixth consecutive year and accounted
for the lowest amount of the GDP (3.4%) since 1947. From 2007 to 2010, the
amount of cash spent in construction projects has dropped $152 billion.
Nationally, this information signifies (as we all already know) that the
construction industry has been hurting.
National organizations can give more specific information. As an example, there has been an uptick nationally in the Architectural Billings Index (ABI) provided by the American Institute of Architects (AIA), but its effects won’t be felt until the middle to end of 2012 when the projects begin to be constructed; 2013 is supposed to have a better and more wide-spread positive economic picture.
How is the demand for construction statewide? In California, employees retained in a variety of jobs indicate how the employers feel things are going. From information from the Bureau of Economic Analysis, to be found here, from 2009 to 2010, there was a decrease of $31.9 million spent in construction. For Los Angeles County, the information shows that construction employment decreased by 6.6% comparing August of 2010 to August of 2011. This amount may be seasonally adjusted or an expectation for what is to come. For Architects in California, employment in Architecture firms between 2010 and 2012 is supposed to increase by 5 percent. Clearly, design is supposed to increase into 2012, but construction will not likely increase until 2013.
California economic data projections of growth for the residential construction industry are expected to remain slow because of the excess inventory of houses due to foreclosures being worked off. Conversely, non-residential construction is expected to increase due to not having been ‘over-built’ during the slow times.
However,
the light at the end of the tunnel may be seen in that, according to Steven Kim of Barclays, regardless of the number of distressed homes, and in
the absence of government sponsored programs, the non-distressed property
prices are stabilizing. Distressed properties are being seen as a higher risk
for those wishing to purchase houses. And, home prices have risen above negative territory for the first time in the last six months.
2012 Being an election year, we keep in mind that the incumbent President, Barack Hussein Obama, wants to be re-elected, so look for positive information regarding the prospects of the economy to be spread. Correspondingly, government related agencies that control economic drivers, like the fed’s use of ‘tools’ such as quantitative easing, may be used to increase the debt of the US while insuring a short term rosy outlook – essentially borrowing money in order to make it ‘feel’ like the economy is getting better. Additionally, people will not want to invest in making major changes or additions to their payrolls unless concerns about rising health care costs and how related issues will work out is known. More jobs mean more people willing to make delayed purchases. Once the outcome of the election is known, people will be able to better enact plans for 2013.
Regardless
of the macroeconomic and local trends, there are always people who want to get
projects finished, and if they have the resources available and have the desire
to complete the project, it will move forward regardless of the state of the
economy. J
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