Dodge: 2018 construction starts will climb to $765B
- Dodge Data & Analytics in its 2018 Dodge Construction Outlook forecasts a 3% rise in the value of total construction starts to $765 billion next year. According to Robert Murray, Dodge chief economist, starts for 2017 should be up 4% from 2016 for a total value of $746 billion.
- Dodge's starts projections included single family (+9%), multifamily (-8%), commercial (+2%), institutional (+3%), manufacturing (-1%), public works (+3%), and electric utilities and gas plants (-13%). Office construction, which has been a construction star for the past few years, should continue to bolster the commercial segment.
- Murray said the slower growth of 2016, 2017 and 2018 compared to the double-digit boom years from 2012 to 2015 signifies a "mature stage of expansion" for the industry. The drivers for 2018 will be job growth, interest rate stability and funding from state and local bonds.
Details of President Donald Trump's $1 trillion infrastructure plan have yet to materialize and seem to have taken a back seat to other initiatives like the failed repeal of Obamacare, immigration and tax reform. However, even if the White House manages to push through an infrastructure spending package, it could bear little resemblance to what the president has been touting since the campaign.
While he was running for president, and during the first months of his administration, the Trump team was big on private-sector investment. The president talked up public-private partnerships (P3s) as a way to leverage limited funds. In his 2018 budget request, Trump suggested that a federal investment of $200 billion could steer another $800 billion of private money toward an infrastructure program. So some industry onlookers were surprised to hear back in September that the president had reportedly told a group of House Democrats that P3s were "more trouble than they were worth" and that private investment would not play a major role in an infrastructure financing scheme.
The White House has said before that there are many infrastructure financing options on the table, and one of those might be an increase in the federal gas tax. Last month, Gary Cohn, an economic adviser to the president, reportedly told House members that a vote on a 7-cent federal gas tax increase could be on the agenda for early next year. The tax feeds the Highway Trust Fund and has not seen an increase since 1993.
Follow Kim Slowey on Twitter