Sage Advice US

Construction, pick-up lines, and economics

I had no idea that the Baltic Dry Index could be used as a pick-up line back in the day! Who knew?

Anirban Basu, chief economist for the Associated Builders and Contractors (ABC), spoke recently on construction-related economic conditions during a Construction Financial Management Association (CFMA) event at Sage offices in Beaverton, Oregon.

Basu recounted how, as a young man, he discovered the Baltic Dry Index and used it as an opening line when dating. This resulted in having even more time on his hands to learn economics. As he tells it, eventually he gave up the pick-up line and got married, but he didn’t give up economics.

It turns out the Baltic Dry Index is a leading economic indicator. The index tracks commodity shipment billings, which lead finished goods production by months.

Stay with me, we’ll get to the construction part.

During Basu’s hour-long presentation of indices and stats, he interjected humor, related the information to the construction industry, and clipped along at fast pace. Everyone in the room—all who work in construction at some level—stayed highly engaged.

International investments in U.S. real estate development

Basu laid out how international trade and economics affect the U.S. and local markets, especially in construction and development projects.

It turns out that there are several conditions currently happening at once:

All this leaves the US as the best place for large international investors. That money triggers construction growth.

Other construction takeaways

I also grabbed these takeaways in between chuckles and outright laughs at Basu’s economic jokes during the presentation:

Bottom line

The next two years should be excellent for construction.

Basu predicts in a few years there will also be the usual periodic recession that comes in cycles. Then there will be a boom in the 2020s when millennials settle down in large numbers and move to the suburbs and boomers want apartments turned into condos.

Be ready. All this points to managing your company extremely well, getting a smart business plan in place, knowing your strengths and weaknesses, and automating business processes, ASAP.

 

Editor’s note: Special thanks to Anirban Basu for an informative and engaging presentation.