A recession is still on the horizon despite a stronger than expected economic performance in 2023, chief economist for the Associated Builders and Contractors Anirban Basu said.

“Many economists have become quite confident in the notion of a soft landing,” he said on a Dec. 13 webinar. “I think the economy’s going to get worse before it gets better. I continue to believe [this is the case], although I am increasingly in the minority." 

Total non-residential construction spending rose 28.2%, not adjusted for inflation, during the period between the start of the COVID-19 pandemic in February 2020 and October 2023, according to the U.S. Census Bureau. Manufacturing continues to lead all construction markets with a growth rate of 164.2% over that time period, while lodging remains at the bottom of the list, falling at a rate of 26.8%.

Webinar participants reported in a survey that while labor issues persist, financing for projects has been increasingly challenging in the past year. “The market is starting to turn a bit,” said Basu. “If the price is not moving forward, you don’t need as many workers. I think that’s the lag effects from higher interest rates.”

Some key economic difficulties over the last several years have improved, with Inflation easing “significantly,” compared to this time last year, said Basu. Additionally, interest rates have been steady for several months and the Federal Reserve announced again on Dec. 13 that an increase is not set until later in 2024.

“These high interest rates have that much more time to continue to hammer away at economic momentum," Basu added.