recession-coming-top-5-factors-watch

 https://www.glassmagazine.com/blog/2023/https://www.glassmagazine.com/blog/2023/recession-coming-top-5-factors-watch

1. SINGLE-FAMILY HAS BEEN IN RECESSION 

The single family market is the “canary in the coal mine” for the overall economy and has been in recession since late 2022, Lokar says. “Now it’s rounding into recovery,” he says.  

However, the sector continues to face some notable headwinds, including affordability issues and high interest rates. “The market needs lower interest rates for people to consider selling their homes that they refinanced when rates were low,” he says.  

2. MULTIFAMILY IS HEADING FOR A TOUGH YEAR 

Companies that have leaned into multifamily contracts during the sector’s boom of the last several years should prepare for slowdown in the near term, Lokar says. “If you’ve been living off multifamily, [the sector] is entering recession,” he says. “Starts were down 28.1% in the last quarter, and permit pulls have cratered.”  

3. NONRESIDENTIAL IS STRONG, BUT WILL SLOW IN LATE 2024 

While single-family construction leads the economic business cycle, nonresidential construction lags. As a result, the market has been strong throughout 2023 and will likely stay strong through much of 2024.  

“For companies on the nonresidential side, it has been great. … And next year should be great, or at least good. But be careful for what comes next,” Lokar says. “You’ll be in recession by end of 2024.”   

4. THE SILVER LINING AMID SLOWDOWN: IMPROVEMENTS IN LABOR, SUPPLY AND INFLATION 

An economic slowdown will provide some relief for companies when it comes to the three top pain points of the pandemic and post-pandemic era: supply chain problems, inflation and labor shortages.  

“This deceleration and ultimate recession is going to take pressure off all of those,” says Lokar. “Your workforce issues won’t be fixed, but they will be easier to manage. Inflation is not fixed, but it’s coming down. And the supply chain has gotten better.”  

5. INVEST IN YOUR BUSINESS DURING A SLOWDOWN 

 slowdown will give the construction industry its first “breather” since prior to the pandemic. “You’ll have an opportunity to get the house in order. You’ve spent 3 to 3.5 years surviving the pandemic, with unprecedented supply chain issues, inflation pressures and turnover. You’re going to be able to breathe.” 

For businesses that plan ahead, slowdowns can be opportunities for investment and preparation for future growth