California: From Bad To Worse

Just when it looked like things might be getting better, the California construction outlook for the year, it appears, has gone from bad to worse. According to McGraw-Hill Construction’s 2009 California Construction Outlook: Mid-Summer Update, the state’s budget crisis has had a nasty effect on our industry, “reducing state tax revenues and worsening the state’s construction declines.” The report says that construction starts for the state are expected to drop 22% in 2009 to $36.5 billion. Here are some of the sobering figures in the report:•Single family starts are expected to fall 31% and multifamily starts will decline 39% in 2009.
•Commercial and industrial construction is set to drop 37% this year, a consequence of the weak California economy and continuing budget crisis.
•Institutional building project starts are expected to slip 23% in 2009, due to pressures on federal, state and local tax revenues from the budget crisis.
•Public works projects, despite the legislature’s inability to balance the state budget, are expected to benefit from the federal stimulus package and 2006’s Proposition 1 bond referenda, so this sector will slip only 5% in 2009. Utility construction, given the focus on alternative energy, will gain 4% over the year.

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