For a while, I asked myself (and others), “What was so great about the Great Depression?” This economic crisis has been considered by the International Monetary Fund (IMF) as the worst world recession since World War II. The impact is felt in almost every industry imaginable, especially the commercial construction industry. I did the course for 18 months from 2007 to 2009. The worst moment occurred in mid-2009.
How did it affect the commercial construction industry? And what is happening about five years after the Great Depression officially “ends”?
The commercial construction industry is used to cyclical changes, but the Great Depression was not a typical recession or cyclical change. No sector of the construction industry was spared the severe effects of the Great Depression. Not residential, commercial, Industria de la CONSTRUCCION or heavy industry, or civil engineering.
One lesser-known aspect of the recession is that the recession followed immediately after the cyclical boom in the construction industry, leaving a large amount of residential and commercial real estate on the market.
As the recession worsened, homeowners stopped paying for their homes, others didn’t buy their homes as planned, and investors were very cautious about financing new construction projects.
2012-2013 was projected to be a period of growth and non-residential construction activities were expected to continue to recover. Once again, there was a lag in recovery, partly driven by governments and financial institutions.
The quarantine of the federal budget has reduced public spending.
Credit restrictions imposed on construction projects, mortgages, and loans in general.
Increase long-term interest rates based on expectations that the government will reduce its stimulus package.
These factors and the very slow recovery of the world economy undoubtedly had a direct negative impact on the construction industry.
Transition to 2015
So what has happened to the commercial construction Industry since 2014? The recovery is progressing, but the pace is not increasing. Factors influencing growth in 2014 (according to industry observers):
Weather-related delays on the project at the beginning of the year.
Continuation of the institutional market decline and lower forecasts for construction spending.
Financial institutions continued their restrictive lending practices.
Do you have any good news? Okay! Let’s take a look at some of the more favorable changes in 2014 and some positive indicators from 2015.
Relaxation of credit restrictions. Loans increased 4% in the second quarter of 2014, most of them related to the commercial construction industry.
Commercial construction projects are growing rapidly in various parts of the United States, especially Texas (Houston) and the general southern region, New York (Rochester and New York), Massachusetts (Boston), and Louisiana (New Orleans).
Consumers are “carefully optimistic” and spending is increasing as is employment.
The commercial construction industry continues to be hit hard by the Great Depression. However, industry watchers, like consumers, are cautiously optimistic (they focus more carefully than optimistically) about the slow and steady progress of the industry.