Even though pandemics of COVID-19 is across the world is accelerating the potential global crisis as the economy is suffering from numerous businesses closing and thousands of people losing their job, economists predicted the arriving recession for the US long before pandemics stroke. As Travis Allen from Alliance Bernstein claims, other metrics can be observed outside pandemics to define how construction is being affected by the current state of the economy.
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Construction Development in 2020 Through the Prism of Economy
As Allen claims, the biggest problem that could cause a recession in a relatively short period is weakening corporate confidence. The weakened confidence of corporates in correlation with pullbacks on capital expenditure could be the optimal environment for a recession if skittishness would prolong at the same or faster pace. Another indicator that can be taken as a metric for recession is the rising unemployment. The case of shortages in labor and overall unemployment of construction workers and workers in other sectors could show the true nature of issues the economy is faced to.
Unemployment as a Certain Indicator into Recession
In case the unemployment rate would rise from 3.5% from the current stance to the value between 4.2% and 4.3% by the beginning of the last quarter of 2020, that would most certainly become a clear sign that the economy is turning. Allen pointed out that the unemployment rate could be a clear sign of the arriving recession, speaking at the Associated General Contractors of America convention in the third week of April. Allen also predicted that the Federal Reserve would do what it takes to limit the economic instability. Only day after, the Federal Reserve pumped 1.5 trillion dollars into short-term lending markets. On Sunday, a couple of days later, the Federal Reserve announced that the interest rates would be pushed down towards nearly 0%. This case should also push the construction industry forward in the fight against recession.
