Winter Doldrums - 2010 starts off slower than 2009

I think a lot of folks were hoping that 2010 would miraculously start off better than 2009, as if the faucet that was the recession would be shut off and all the pent up demand would begin flowing again. Not so. We are only half way through January and my colleagues are wondering if 2010 might be even worse than 2009. There seems to be nothing in the short term pipeline.
A couple of thoughts might help give some perspective to things:

At the end of 2008, there was still some inertia from earlier in the year that slopped into the first quarter of 2009. Indeed some markets actually exceeded expectations through the first three months.

Secondly and perhaps more importantly, it appears that we are now in a seasonal construction cycle. Years ago, before interest rates and schedule were all that mattered, construction slowed significantly in the winter. Builders saw very little benefit in trying to pour concrete and pound nails in the rain and snow. In those days, construction began slowing in early November and didn't start back up until February or so, because there was no hurry. The home buying season was late Spring and Summer, so as long as homes and buildings were well into the construction phase, things were fine.

In the Commercial Market, we continue to see a considerable amount of backlog in Public Sector projects. The Subsidized Housing market is making some waves, and we even see some of our Retail developers raising their heads and poking around at some projects that were left on hold last year. It is way too early to predict that we are through the worst, just that there is some activity which should pave the way for a little optimism. On the Residential side, which is not my expertise, I grab at a few data points that seem to indicate better times to come. First, housing inventory continues to drop, always a good sign. Secondly, a few of the larger builders are optimistic that 2010 will be better, and plan more starts this year. I overheard a colleague mention that housing permits are up from last January. Finally, our Administration will continue to spend money in an effort to jump start the housing market.

So let's not use the first few days of the New Year as an indicator of the year ahead. It's cold and wet, and nobody is motivated to work right now. But it is in our nature to be active and productive and those in the business are ready to move on. 2010 might just surprise some people.....

Sincerely,

Gary Zagelow
Commercial Sales Manager