First it was the supply chain, then lumber prices, then steel…and now the COVID-19 Delta Variant is set to add a lot of uncertainty into the third and fourth quarters of this year. The ripple effects of the pandemic are far reaching and apparently not yet over.
Understanding the dynamics driving change in the economy during this phase of the pandemic is becoming a full-time job for many of us. For the past two months, I have had the opportunity to visit a number of chapters and discuss current events with contractors (It’s great to see people face-to-face again!). I have gotten the sense that we all have steady work, but we are not as busy as we were in the earlier part of the spring/summer.
Momentum has pulled back slightly due to several economic reasons including supply disruptions, rising costs of construction materials, fear of inflation, and a general hesitancy to invest at a time the world is reacting to the COVID-19 Delta Variant.
As I write this, there is general anticipation that the Senate’s infrastructure bill will be reconciled and voted on September 27, while the $3.5 trillion budget framework is still to be debated. The infusion of spending would be welcome for the growth opportunities it would bring.
The timing couldn’t be better as nonresidential construction costs have increased 23.4% compared to a year ago this time, according to Anirban Basu, CEO, Sage Policy Group. All of us were wondering about the steel market, and SMACNA responded with a deep dive into some of the causes.
SMACNA continues to monitor both economic and legislative activities, sharing their findings through a variety of valuable resources including their daily news email — Executive News Brief, timely webinars, Member Updates and Chapter Leadership News.
There are other indicators that you can also watch to help predict the upcoming economy. One such indicator is the AIA’s Architectural Billings Index. An article in this SMACNews issue takes contractors through this Index and shares why it is an important leading indicator for the pace of our work 12 months from now. If architects are not billing, then there are no new projects in the pipeline. Another key source listed in the cover story is the Fed’s Beige Book, which reports anecdotal information derived from bank branch directors, businesses, community organizations, economists, and market experts on current economic conditions in various regions.
Utilizing these economic indicators can help you benchmark your business activity to see if it is mirroring the economy, or if you should take a closer look at your operations and the competitive landscape around you and make some adjustments.
An overlooked resource I rely on to benchmark all this data is my peer group. Talking with trusted peers is a great way to get a good sense of business and economic conditions across the country. Our peer group examines both internal and external factors that drive business success. Check out the “Let’s Talk Shop” Podcast to hear my conversation with Matt Cramer and Jack Knox as we talk about our peer group. To find that, just search “peer” on SMACNA’s website. A good business owner is always trying to predict the future so we can be prepared for what is in front of us!
Angie Simon, SMACNA President