“Because of the Federal Reserve’s rapid expansion of money supply in recent months and the federal government’s massive prospective outlays, there are many economic observers who have now become fixated on the specter of future inflation,” said Associated Builders and Contractors (ABC) Chief Economist Anirban Basu. “However, deflationary pressures continue to dominate and ABC members have many other things to worry about before a resumption of inflationary pressures and higher materials prices.
“Construction volumes continue to decline around the world, with the implication being that demand for construction materials will remain soft,” added Basu.
“Given the ongoing spread of economic weakness globally, ABC members should expect deflationary pressures to remain in force for months to come,” said Basu. “There are exceptions to this, of course, including oil prices, which have been trending higher in recent weeks. This has little to do with growing demand and everything to do with promises of supply cuts by major oil producers.
“With the presence of declining construction input prices, this has become an advantageous moment for the federal government to be investing in infrastructure,” stated Basu. “However, the advantages of falling construction materials prices may be more than offset by potential shifts in the public policies that shape the character and functioning of America’s labor markets.”