By Victoria K. Sicaras
As 2011 wound to a close, reports of a slowly growing GDP and signs of life in the housing sector pointed toward a strengthening economy.
But don't break out your champagne bottles yet, as “strength” is a relative term. We're talking about an economic climate in which nearly all of our nation's financial muscle had been stripped away. It will take many years to build it back up to prerecession size.
Additionally, continued recovery is still very much dependent upon real estate and construction activity, cautions Anirban Basu, chief economist for the national organization Associated Builders and Contractors Inc. What little growth we've experienced in recent years is due to the American Recovery and Reinvestment Act of 2009. As stimulus-funded projects decline, growth in nonresidential construction will increasingly depend on private investment.
But with office vacancy rates still high, job creation slow, and lending disciplined, that's not likely to increase much in 2012, warns Basu. As a result, public construction spending continues to decline in many communities across the United States.