The technical definition of a recession, two consecutive quarters of decline in the gross domestic product, has been met in 2022 in the first two quarters of the year.
But ABC Chief Economist Anirban Basu counters that general consumer spending, summer travel, job growth, unemployment and wage growth do not indicate recession. In addition, multiple polls and surveys conducted by the Associated Builders and Contractors and other industry sources suggest that construction contractors remain optimistic about their profit margins over the next six months.
The confidence starts to decline, though, when projections go out for 12 months and beyond.
"When you have 43,000 jobs in September, when unemployment is down to 3.5%, when average hourly earnings are growing at 5% or better, when contractors are telling me that they expect growth in sales and employment, to me that is not indicia of recession,” Basu said during the recent Q3 Construction Executive Economic Update and Forecast. "Those are indicia of an economy that is still growing. It's not in recession right now.”
Throughout 2022, Basu has maintained a forecast of recession in 2023, and after the third quarter, his forecast has not changed.
"I think we're headed for a recession in 2023, and I do not believe it will be a mild one," he said.
As borrowing costs continue to rise rapidly ,they will continue to drive the economy into recession. He forecasts that consumer spending will decline and as has already occurred. And due to rising interest rates, the housing and financial markets will be in turmoil.
