A Contractor’s Guide to The Economic Future Through 2021

By Colin Sheehan, RCS Reporter.  

Take a look at these possible economic outcomes and prepare your business for the future. 

In Cotney Consulting Group’s latest video, The US Economic Outlook, John Kenney outlines three possible economic scenarios that could affect the future of the construction industry and how you run your business.  

All industries across the globe have been affected by the ongoing coronavirus pandemic. This year has created major changes in the way business is conducted and those changes will continue  for many years to come. This video highlights economic forecasts for the construction industry throughout the rest of 2020 and well into 2022.  

“This year has been a harsher reminder of the cyclical market,” said John. “The lasting impact of the pandemic on our construction industry and individual business performance remains to be seen. Your strategic plan of the pre-pandemic is no longer viable. It is essential to move forward; you have a well-thought out contingency strategic plan in place.” 

The three possible scenarios with Cotney Consulting Group’s recommendations on how to deal with them are outlined below: 

1. Extended economic declines 

This first scenario is predicted to be the most likely scenario coming our way. Industry research has indicated that while the 2020 recession will continue to dissipate, GDP growth will remain on the decline and end in the negative 5 percent range. All construction and construction-related spending will continue to see declines past 2021 into 2022. 

“In this extended decline scenario, every company will react and perform differently when it comes to wage freezes or wage reductions and the suspension of bonuses. The sooner you get a handle on your own forecasts for the upcoming year and beyond, then you can respond promptly and put your corresponding action plans in motion,” said John.  

2. Economic soft landing  

Well positioned stimuli and strengthening the labor markets alongside GDP growth would allow for a sooner return in demand for construction services in 2021.   

If this optimistic forecast happens, your areas of focus should be on: 

• Talent management for stability and preparation 

• Examine staffing needs for 2021 and beyond 

• You must give careful thought to staff right-sizing, emphasizing the right people in the right jobs. 

3. Economic fragmentation 

This last scenario assumes that the U.S. economy is at the beginning of a long-term negative GDP growth well into 2022. This forecast would have very similar results to that of the Great Recession that occurred within the years of 2007 to 2009.  

John and Cotney Consulting Group see the most likely outcome being scenario 1 followed by either scenario 2 or 3.  

“The best planning begins with a strong understanding of your current operations so that effective decisions can be made quickly as the economic realities become clearer,” said John.  

Be sure to watch the whole video here and prepare your business for whatever comes next. 

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