In a positive sign for the construction economy, noted economist Anirban Basu recently commented on the stability of prices for construction materials in the Producer Price Index. He found the steadiness of construction material pricing particularly important given all the factors that suggest it should have risen.
The threat of military conflict, fluctuating global currencies, a plunge in the price of gold, and rising U.S. interest rates would normally cause a rise in materials prices according to Basu. The records from 2004 to 2008 confirm that to be the case. Yet, as a sign the economy is getting healthier, it has not happened this year.
According to the Department of Labor’s Producer Price Index, construction material prices only went up 0.3% in August and have increased by a measly 1.2% for the year. These factors, among others, lead Basu to conclude that Europe has left its recession behind and that the U.S. economy should begin to grow more aggressively in 2014. This, in his opinion, would benefit the construction market considerably.
