The U.S. economy is going to get worse before it gets better, an economic analyst told a room full of boiler-industry professionals Jan. 17 during the American Boiler Manufacturers Association's 2009 Annual Meeting in Weston, Fla.
In a forecast of the nonresidential-construction market, Ray Yacouby, senior consultant, construction services, IHS Global Insight, said the deepening financial crisis may be the worst of the post-war era, citing trillions of dollars in wealth that have been “obliterated”; tightening or shut-off credit for households, businesses, and state and local governments; and the fact the rest of the world is entering a recession.
Yacouby predicted an “imminent downturn” in U.S. nonresidential construction.
“The mortgage crisis has spread to all lending …,” Yacouby said. “Unemployment is rising, especially in key sectors …. Business confidence is shaken …. Governments at all levels are facing deficits …. Energy, materials, and commodity costs all remain at historically high levels …. Aggregate demand is weakening.”
Institutional spending, Yacouby predicted, “will weather the storm better than commercial/industrial.”
The bottom line, Yacouby said, is that, “2009 is not going to be a pleasant year. If the financial crisis dissipates, a modest rebound in 2010 is possible. If not, all bets are off.”
Once the crisis does subside, “North American resilience and Asian dynamism will reassert themselves,” Yacouby said.
Despite the depth of the country's economic woes, there is reason for optimism, Yacouby said.
“While it feels bad, it's not the end of the world,” Yacouby cautioned. “We've been here before.”