Despite rising borrowing costs, labor shortages, and a weak economic outlook, contractor confidence rebounded in January, an optimistic sign after mostly stagnant growth throughout much of 2022. The construction backlog dropped in January but remains one month higher than in January 2022, Construction Dive reports.
If the Fed continues to raise rates, falling homebuyer demand could lead to a weaker year for home building than most contractors anticipate, especially if a housing recession in late 2023 comes to fruition.
“The U.S. economy continues to fend off recession,” said Anirban Basu, ABC chief economist. “Some economists have concluded that rather than a hard or soft landing, the U.S. economy is headed for ‘no landing,’ meaning that economic growth will continue despite rising interest rates.”
“[The] jobs report strongly suggests that the Federal Reserve has more work to do,” said Basu. “Associated upticks in borrowing costs increase the likelihood of a recession sometime later this year.”