2021 to the second quarter, the federal Bureau of Economic Analysis reported on October 1. Tat put California among the six fastest-growing state economies, considerably ahead of the U.S. growth rate of 6.7%.
Review and Forecast:
Construction Prospects Brighten, But Coronavirus Clouds Linger BY KEN SIMONSON, AGC OF AMERICA CHIEF ECONOMIST
C
alifornia contractors have reason to be optimistic about the volume of projects in 2022. But pandem-
ic-related problems may cause selective setbacks. Construction employment rebounded well in 2021 from the disastrous downturn at the beginning of the pandemic. From February to April 2020, the industry shed nearly one out of five construction jobs in the state – a total of 175,000. But payrolls swelled to 892,000, seasonally adjusted, by October 2021, bringing employment back within 21,000 jobs or 2.3% of the pre-pandemic peak in February 2020. By comparison, U.S. construction employment declined by 15% from Feb-
20
CALIFORNIA CONSTRUCTOR JANUARY/FEBRUARY 2022
ruary to April 2020, slightly less steeply than the 19% fall in California. Construc- tion employment in October 2021 both nationwide and in California was down about 2% from February 2020, indicating that the industry was recovering more robustly in the state than nationally from their respective low points. (See the ac- companying chart on page 21.) The recovery should continue and
probably gather steam in 2021. “Real GDP” or inflation-adjusted gross do- mestic product – “econospeak” for the value of all goods and services produced in a state, net of imports – increased at an 8.1% seasonally adjusted annual rate in California from the first quarter of
Infrastructure Funding Boom Te enactment of the federal Infrastruc- ture Investment and Jobs Act will add huge amounts to funding over the next several years for highways, transit, inter- city rail, water infrastructure, renewable energy, broadband, and other types of construction. For many of these cate- gories, the timing and allocation among states and projects won’t be known for several months at least. But the large boost in federal funds for highways and bridges should start flowing soon, since the money will be routed according to set formulas through existing programs and agencies, namely the Federal Highway Administration and Caltrans. Apart from federal dollars, California’s fiscal position continues to benefit from rapid growth of capital gains and other income tax receipts associated with the strong rise in housing and stock prices. Prices of existing houses sold between the second quarter of 2020 and the second quarter of 2021 appreciated by an aver- age of 20% in California, exceeding the national average of 17%. Tat increase supports spending by sellers, adds to local and state government receipts, and encourages additional single- and multifamily homebuilding. Private nonresidential construction also is poised to expand. Te unprece- dented congestion at the ports of Long Beach and Los Angeles should lead to more construction at the ports and around overloaded warehouses in the Inland Empire and elsewhere in the state. Te seemingly never-ending drought and accompanying wildfires are leading to
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