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  • PBX21 Virtual Session Recap: Chief Economists Offer Outlook for Construction Industry


  • To view the video presentation, click here.


  • Sustained price escalation of building supplies and prolonged delivery delays as a result of supply-chain issues are not going away any time soon. Throw a decrease in construction employment into the mix and it all adds up to a sobering economic outlook for the construction industry. Despite these challenges, the nation’s top construction economists see a glimmer of positive signs for the construction industry. 
     
    Over 150 viewers tuned in for a live, real-time presentation from Ken Simonson, Chief Economist with the Associated General Contractors of America (AGC), and Dr. Robert Dietz, Chief Economist with the National Association of Home Builders (NAHB), who provided informative insights on the economic outlook of the construction industry in Hawaii and across the nation.

    The PBX21 virtual session was held Thursday, Oct. 28. Glen Kaneshige, President of Nordic PCL Construction, Inc. and a past GCA President, served as moderator of the session. Simonson’s participation was sponsored by the GCA of Hawaii and the presentation by Dietz was sponsored by BIA Hawaii. Their presentations complemented each other and provided a total picture of construction and homebuilding.

    Here are some highlights from their presentations:

    • In the near term, economic recovery looks more certain, but the virus continues to create uncertainty. COVID-19 vaccinations are supporting economic growth and the delta variant’s impact is waning, but among construction workers vaccination rates are low and vaccine hesitancy is higher compared to other occupations;
       
    • There will be a slower rebound for construction because owners, investors, lenders and others are uncertain about future demand and are concerned about project costs and the ability for projects to be completed in a timely manner. It is important to note that not all supply-chain issues are caused by the pandemic;
       
    • Hawaii’s population is continuing to decline and this may weaken demand for most construction;
       
    • Ongoing cost and supply challenges may lead to more project deferrals. There is less demand than pre-pandemic levels for retail, offices, higher education, and travel and lodging facilities, but remodeling, local distribution centers and data centers are the best prospects for the near future;
       
    • There was stronger growth in the construction of single-family and multi-family homes this year compared to 2020. Remodeling and renovation were in high demand as families found they needed more space as they spent more time in lockdown at home during the pandemic or continued telecommuting. However, growth in homebuilding is expected to taper down in 2022 and 2023 with a projected rise in interest rates.
       
    • Affordable housing has been an ongoing issue for Hawaii, but the economists predict building supply costs and the need to pay higher wages to attract construction workers will put housing even more out of reach. Communities that add affordable housing will grow.

    To view the full video presentation, click here.

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