E.C. Magazine’s ’13 Construction Outlook

The January issue of Electrical Contractor arrived the other day, with a lengthy — and graphics-filled — article on the 2013 construction outlook.

Online, it’s presented with just one graphic — and 4,500 words. The edge here is to the PRINT magazine, which is really remarkable in 2013, isn’t it?

Here’s the conclusion:

With roadblocks removed, the fundamentals are in place and many of the construction market sectors are on the ascent going into 2013. This year, momentum should be strong.

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For the record, The EleBlog disagrees — vehemently — with that conclusion. Which does not make it wrong.

But it’s important to note: At this point, central banks around the world are in the process of releasing a never-ending tsunami of new money into markets. Much of this money is invested in low-risk things (like government bonds – if they remain a low-risk investment).

As more and more money floods into bond markets, interest rates keep falling. Those looking for a reasonable return on their money — like retirees, those who run pension funds, and insurance companies — have to go someplace else on the risk curve to get that return.

As a result, stock markets go up (when maybe they should not). Buildings get built that maybe aren’t going to be needed. One could go on . . .

EleBlog’s vehement disagreement with ANY optimism on ANY market — including construction’s outlook — is based on the fact that, at some point, the damage that central banks are doing to the future is going to be reflected in how assets are priced in the present.

ADMITTEDLY, THAT POINT MIGHT NOT COME IN 2013. However, as we really don’t know when it’s going to happen — when bond investors reject low interest rates, when central banks scare the bejesus out of investors, when the whole house of cards collapses in a light breeze . . . the conclusion is that it MIGHT NOT happen in 2013, and therefore the E.C. construction outlook might be reasonable.

Further, the “emotional feeling” is that the longer this goes on, the worse the denoument is going to be. That might not be quite right, either.

But what if it is?

 

Source: http://electricalcontractor.com/?p=8058

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