U.S. Economic and Construction Outlook Presented by: Bernard M. Markstein, Ph.D. Markstein Advisors May 7, 2014 Airports Council International ACI-NA International Aviation Issues Seminar Washington, D.C. December 7, 2017
The U.S. Economy Markstein Advisors 2
Overview of the Economy Economy growing Employment growing --Near full employment? Inflation remains moderate, but increasing Federal Reserve raising interest rates: how high, how fast? Implications of tax reform Energy (oil) prices Markstein Advisors 3
Overview of the Economy Where are we headed with trade? Strong dollar: pluses & minuses Europe showing signs of improvement but total impact of Brexit is an unknown Markstein Advisors 4
Risks to the Economy (1/2) Approaching full employment? Tax reform Inflation/Interest rates (the Fed) Disruptions from increased tariffs/trade war China EU Brexit? Markstein Advisors 5
Risks to the Economy (2/2) Government shutdown? Energy (oil) prices European government debt default (Greece) The euro (Greece) Russia? Markstein Advisors 6
Construction Overview Markstein Advisors 7
Overview of Construction Construction Spending Components 2002 2006 20% 18% 32% 47% 29% 53% Residential Nonresidential Building Heavy Construction Residential Nonresidential Building Heavy Construction 2002 Total - $849 Billion 2006 Total - $1,167 Billion Markstein Advisors Source: U.S. Census Bureau 8
Overview of Construction Construction Spending Components 2006 2010 18% 53% 33% 31% 29% 36% Residential Nonresidential Building Heavy Construction Residential Nonresidential Building Heavy Construction 2006 Total - $1,167 Billion 2010 Total - $809 Billion Markstein Advisors Source: U.S. Census Bureau 9
Overview of Construction Construction Spending Components 2006 2016 18% 26% 53% 40% 29% 34% Residential Nonresidential Building Heavy Construction Residential Nonresidential Building Heavy Construction 2006 Total - $1,167 Billion 2016 Total - $1,186 Billion Markstein Advisors Source: U.S. Census Bureau 10
Overview of Construction Construction Spending Components 2002 2016 20% 26% 47% 40% 32% 34% Residential Nonresidential Building Heavy Construction Residential Nonresidential Building Heavy Construction 2002 Total - $848 Billion 2016 Total - $1,186 Billion Markstein Advisors Source: U.S. Census Bureau 11
Residential Construction Outlook 1.6 1.4 1.2 1.0 0.8 $ Trillions Total Construction Spending History Forecast 1.34 1.28 1.23 1.17 1.19 1.15 1.10 1.11 1.08 0.99 1.01 0.89 0.91 0.91 0.85 0.85 0.81 0.79 0.6 0.4 0.2 0.0 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 Source: History U.S. Census Bureau Markstein Advisors 12 Forecast Markstein Advisors
Overview of Construction 1,600 1,400 1,200 1,000 $ Billions Total Construction Spending History Forecast Residential Nonresidential Building Heavy Construction 800 600 400 200 0 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 Source: History U.S. Census Bureau Markstein Advisors 13 Forecast Markstein Advisors
Residential Construction Markstein Advisors 14
Residential Construction Outlook 750 700 650 600 550 500 450 400 350 300 250 200 150 100 50 0 Residential Construction Spending $ Billions History Forecast 618 620 579 538 547 520 500 451 473 429 402 367 375 329 276 256 252 253 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 Source: History U.S. Census Bureau Markstein Advisors 15 Forecast Markstein Advisors
Residential Construction Outlook 450 400 350 Residential Construction Spending $ Billions 2006 to 2016 17 19 300 250 200 150 100 50 0 Single-Family Multifamily Improvements Source: History U.S. Census Bureau Markstein Advisors 16 Forecast Markstein Advisors
Nonresidential Building Construction Markstein Advisors 17
550 500 ACI-NA $ Billions Nonresidential Construction Nonresidential Construction Spending History Forecast 450 400 404 439 377 379 408 418 430 446 350 340 333 300 275 269 283 302 292 284 301 303 250 200 150 100 50 0 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 Source: History U.S. Census Bureau; Forecast Markstein Advisors Markstein Advisors 18
Nonresidential Construction Nonresidential Construction Spending 120 $ Billions 110 100 2006 to 2016 17 19 90 80 70 60 50 40 30 20 10 0 Hotel/Lodging Office Commercial Source: History U.S. Census Bureau; Forecast Markstein Advisors Markstein Advisors 19
Nonresidential Construction Nonresidential Construction Spending 120 $ Billions 110 100 2006 to 2016 17 19 90 80 70 60 50 40 30 20 10 0 Manufacturing Healthcare Education Source: History U.S. Census Bureau; Forecast Markstein Advisors Markstein Advisors 20
Heavy Engineering Construction Markstein Advisors 21
Heavy Engineering Construction Heavy Engineering Construction Spending 400 350 $ Billions History Forecast 300 250 248 272 274 265 251 274 274 298 305 304 293 302 317 200 171 171 169 185 208 150 100 50 0 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 Source: History U.S. Census Bureau; Forecast Markstein Advisors Markstein Advisors 22
Heavy Engineering Construction Heavy Engineering Construction Spending 120 $ Billions 110 100 2006 to 2016 17 19 90 80 70 60 50 40 30 20 10 0 Highway Water and Sewer Conservation Source: History U.S. Census Bureau; Forecast Markstein Advisors Markstein Advisors 23
Heavy Engineering Construction Heavy Engineering Construction Spending 120 $ Billions 110 100 2006 to 2016 17 19 90 80 70 60 50 40 30 20 10 0 Transportation Communication Power Source: History U.S. Census Bureau; Forecast Markstein Advisors Markstein Advisors 24
Heavy Engineering Construction Transportation Construction Spending 60 55 $ Billions History Forecast 50 45 40 35 30 25 26 25 25 25 28 32 35 37 38 35 38 39 42 45 42 44 47 49 20 15 10 5 0 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 Source: History U.S. Census Bureau Markstein Advisors 25 Forecast Markstein Advisors
We do not have great highways because we are a great nation. We are a great nation because we have great highways. --DeWitt Greer, Chairman of the Texas Highways and Public Transportation Commission, 1969-1972 Markstein Advisors 26
Contact Info and Links Bernard M. Markstein Office: 301-588-5190 bmarkstein@verizon.net LinkedIn www.linkedin.com/in/markstein3 Twitter @BMarkstein Markstein Advisors 27