It seems like every week a new financial institution is forecasting a recession for 2023-2024.
This last week it was the IMF (International Monetary Fund) hinted at a “darkening” future, saying “It is going to be a tough 2022 – and possibly an even tougher 2023, with increased risk of recession.”
ConstructionDive shared details about how this impending recession will impact construction companies.
What’s missing in the conversations around an upcoming recession are:
What’s the sentiment of construction owners and workers? Are they thinking about a recession? Are they worried? Are they planning for it?
This report shares some hints at how folks inside the construction industry are feeling.
There are over 7 million Americans working in construction.
Interestingly, the number of currently employed construction workers is nearly identical to the number of Americans in the industry right before the recession of 2008. See the graph below.
How do you capture the sentiment of over 7 million people? Large-scale studies and data on sentiment are missing so we uncovered trends through alternative sources, such as Google and social media.
The graph below showing data pulled from Google Trends shows how the query “construction recession” has trended since 2004.
Essentially, this shows how many people are pulling out their phones or sitting down at their computers, going to Google, and typing in queries like "construction recession."
You can see 3 spikes since 2004 that all average +400% over the baseline:
Who is searching for these queries on Google?
The short answer: we don’t know. However, it’s highly likely that construction business owners are worried and heading to Google to do some research.
Another place people go for conversations around topics they care about is Reddit.
While analyzing Reddit captures only a small sliver into the sentiment of 7 million people, it’s still interesting to evaluate.
In the past month, there have been more reddit threads about a recession impacting the construction industry than since the beginning of the pandemic.
Folks are going to Reddit with questions like:
The overall sentiment of the 133 comments has an underlying anxiety to it. One person commented that the current environment is “sketching [them] out a little bit.” This idea of feeling “sketched out” is a prescient description.
Brek Goin is the founder and CEO of Hammr, which is an online community of over 10,000 contractors and construction business owners.
We spoke with Brek who has a deep pulse on this community and he said it bluntly:
“yeah people are fearful!”
He elaborates to say that “Construction has shown it can handle rising rates but many businesses are unsure if they can handle a recession. Cash is king. Businesses are cutting costs. The ones who can weather storms are feeling optimistic about acquiring new talent as the labor market reshuffles.”
A recent poll of 700 construction companies from around the world, most home builders, actually showed optimism about an upcoming recession.
Is this because this subset of builders has extremely long lead times and contracts for the next 12-18 months? It’s likely.
With many factors…
… that provides nuance to this question, the answer isn’t clear.
However, it appears that in general, sentiment within the industry is shifting towards fear and anxiety.