It’s about a week after the 2012 presidential election and we now know that voters granted President Obama a second term. In Congress, the Democrats gained a couple of seats in the Senate, while the House remained essentially status quo. The body is still split – donkeys holding the Senate and elephants hanging on to the House.
We’ve updated The Revised 2013 Guide to the U.S. AEC Markets to reflect the results, including in our section titled “Election 2012: What It Means to You” and our ranking for 40 markets and subsectors.
The post-election question everyone is asking: What do the results mean for our industry? In a November 9 webinar sponsored by Reed Construction Data (RDC) (Norcross, GA), the consensus answer among three economists is…not much.
“People tend to over ascribe economic impacts to the president alone,” says Ken Simonson, chief economist for the Associated General Contractors of America (AGC) (Washington, DC). “The reality over the last several decades is that we’ve had Democratic presidents and Republican presidents who have presided over strong periods of growth and really bad recessions. So much depends not only on Congress, but the Federal Reserve and other outside influences. We would have seen, if not gridlock, a very difficult situation, for either a President Romney or a President Obama.”
RDC’s Bernie Markstein says the primary difference between Democrats and Republicans is that the former tend to spend more on social programs, while the latter tend to spend more on defense. “But it’s a leaning,” he said. “We do need to spend on things like infrastructure. We’re all a little concerned that the money won’t be forthcoming. I’m a bit of an optimist that they can get together and agree that there does need to be more spending there, but this gridlock is really frustrating.”
Markstein added that immediately after the election, all the talk was of bipartisan cooperation. That lasted “about an hour,” he joked, saying that the rhetoric quickly returned to the same old place. “So I’m hopeful, but they don’t give me a lot to hope for.”
Kermit Baker of the American Institute of Architects (AIA) (Washington, DC) said that any different approaches by the candidates would not have affected the construction industry in any significant way for several years – probably not until the term was over. “In the short run, it’s hard to make an argument that there would have been significant differences in construction activity under a Romney Administration than there will be under an Obama Administration,” said Baker.
At The JAGG Group, we wholeheartedly agree that the results of this one vote are unlikely to have a major effect on the overall industry for the next few years. However, the Obama win, combined with the looming “fiscal cliff” that threatens to smack down the recovery with a drastic jump in taxes and draconian spending cuts, may stifle economic growth in the last several weeks of 2012 as the sides attempt to settle the issue.
Most economists and political insiders believe the sides will address the issue satisfactorily. At minimum, Congress and the President will agree to extend the deadline for a period that allows for a resolution, they say. At best, they sides will compromise and avoid the fiscal cliff plummet that could bring another recession.
Despite these serious threats, and the consensus opinion that one presidential race doesn’t much influence the short-term performance of the construction industry, it would be naïve to think that there were not winners and losers among the markets served by the AEC industry when the ballots were cast and counted on November 6, 2012.
Here is our take on the winners and losers from Election 2012. We offer more detail on these and dozens of other markets in the nearly 300-page book’s Section 5 (“Election 2012: What it Means to You”), Section 6 (“Outlook for the US AEC Markets”), and Section 7 (“2013s Best & Worst Markets”).
High-Speed Rail. Throughout The Revised 2013 Guide to the U.S. AEC Markets, we predicted that a Romney win would have doomed the vision for a national network of high-speed rail because so many conservatives oppose HSR. Even with Obama back in office, HSR faces numerous challenges; but it at least has a pulse.
Wind and Other Alternative Energy. Obama wants to extend the production tax credit (PTC) for wind energy development; Romney said he would let it expire. The Obama win, then, is good for wind. Same goes for other alternative energy PTCs set to expire at the end of 2013.
Health Care. A qualified win. While Obamacare’s full effects remain unknown, the uncertainty over its potential repeal has waned, if not disappeared. This could spur development in the sector. States may still seek to undermine its primary principles, however.
Bicycle and Pedestrian Trails. The GOP-controlled House may still have a bullseye on the back of the bike and pedestrian trail movement, but the strong showing by Democrats in the election could ease efforts to pull back on government-funded investment in these “non-traditional” transportation projects.
Markets Driven by EPA Regulations. It is no secret that the Republicans are gunning for the EPA, but Obama’s win keeps the agency safe from all-out attack for a few more years at least.
Defense. As the AIA’s Baker says, a Republican would be less likely to cut military spending. The truth is, most of Obama’s intended military cuts would not affect construction – and some might actually benefit it in the long term – but the military markets may have been better off if Romney had won.
Commercial Markets. Presumably, Romney’s policies would have attempted to stimulate business growth and opportunities. This would have arguably helped drive job growth, resulting in the need for more and better office space, hotels, retail outlets, and so on. Brownfield development may also have prospered better under Romney.
Coal. With Romney in the White House, the current aggressive attempts to clean up emissions from coal-burning plants may not have been so aggressive.
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