National Construction Leader Joe Natarelli and Chief Construction Economist Anirban Basu kicked off their 2016 article series for Construction Accounting & Taxation, in the March-April issue.
Construction Accounting & Taxation
The prior three recoveries lasted 95 months on average – this one is 80 months old already. Meanwhile, the Japanese economy is so weak that the nation’s central bank recently opted to copy the European model and introduce negative interest rates. Emerging economies like Turkey, Russia, and Brazil also continue to stumble, leaving the United States, India, and a handful of others to support global economic expansion.
There are many implications associated with a weak global economy, including weak commodity prices. As of this writing, oil is trading at $35 a barrel, a far cry from roughly $110 a barrel during the summer of 2014. Other commodity prices have similarly collapsed, including steel, iron ore, natural gas, copper, and many others relevant to the U.S. construction industry.
For now, the U.S. economy remains in recovery despite financial and commodity market turmoil. At the end of 2015, the Dow Jones stood at 17,423.03, a drop of 407 points (2.3 percent) over the course of the year. The new year started poorly, with the Dow dropping another 276 points on the first day the markets opened. This combination of slimming profit margins and turmoil throughout the world had sellers outnumbering buyers in the earliest days of 2016.