Economist Predicts When We Will Hit a Post-COVID Economy

Chris Kuehl, Armada Corporate Intelligence, says, “Construction spending is predicted to be solid—even commercial.”

What will the other side of COVID-19 look like and how will we know when we get there? This is one of the questions keynote speaker Chris Kuehl of Armada Corporate Intelligence attempted to tackle yesterday when he addressed members of the Fenestration and Glazing Industry Alliance (FGIA).

“The big question is whether the stimulus will be an opportunity for the economy to roar back,” he said.

“When the consumer is given the opportunity to spend again [spending] will be on fire.” Whether or not the stimulus plan accelerates that is yet to be seen, he said. But one thing is certain: employees who kept their jobs saved money at a record pace.

“Our savings rates are at a pace we haven’t seen in 30 years,” he said. “We used to save 2-3% and we have been up 10-12%. That money can cascade out to the economy in a hurry.”

When that crescendo will happen however is still uncertain, as vaccines are rolling out slowly, and it’s still unclear when COVID-19 protocols will be lifted. “We may get to some sort of herd immunity by mid-summer [July or August], but we won’t be completely out of the woods until next year.”

That being said, studies show that people’s worries about COVID-19 have declined a little—but have been overtaken by concerns for inflation.

Kuehl was certain about one thing: The pandemic economy is not permanent. “Changes in work patterns are more permanent,” he said, “as more people will continue to work from home.”

Construction spending is predicted to be solid—even commercial. “Residential is considered a reliable sector,” he said.

“Even non-residential construction will hold its own to a certain degree,” he said. “But it will be more toward warehousing and not office buildings.” It also won’t be in lodging, as that sector is taking the biggest hit right now, according to Kuehl.

He also pointed out that more construction is taking place on the periphery of urban areas.

One attendee seemed surprised by Kuehl’s positive predictions for commercial construction. “How is it that we see non-residential as flat when so many sectors are down?” the attendee asked.

Again, Kuehl pointed to the fact that new warehouses and distribution centers are popping up everywhere, for companies such as Amazon and FedEx. “That is part of what is driving the construction sector,” he said. “It probably would show growth if it wasn’t for the office sector.”

Indeed, the office sector is the one everyone is watching. “Companies are realizing the limitations of working at home,” said Kuehl. “They want their employees present part of the time. So remodelers are working on office buildings where they are changing the configuration. Now they want hermetically sealed offices, and are putting up walls—they no longer want the open spaces. The commercial side will have to be the most adaptable.”

A second attendee also asked a question about office construction, specifically, will we see more shared office space, or coworking spaces. Kuehl said this is definitely the case and that we will see more mixed-use configurations as well.

“Companies are saying, ‘I need conference space periodically as my employees are all over the country but then come together periodically.’ The challenge for office construction is the ability to expand and contract according to employer’s needs.”

The FGIA virtual annual conference takes place through Thursday. Stay tuned to USGNN™ for continuing coverage throughout the week.

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