Despite the reopening of the economy in most areas and the lowered death tolls in most regions, there are some effects of Covid-19 that are likely going to last into 2021 for the construction industry.
With the poster child being the rapid rise in the cost of lumber, the price of construction materials has gone way up and will likely remain high for the immediate future. In September, the Association of Builders and Contractors (ABC) measured eleven subcategories of construction and found that eight of them saw month-over-month increases. It is estimated that even as construction begins to normalize, these materials' costs will remain high due to increased demand.
"Despite the lingering pandemic, the global economy has been recovering, increasing demand for key commodities," their statement said. "Rapid viral spread, including in Europe and parts of North America, render materials shortages more likely during the winter months."
Supply Chain Problems
One of the factors driving the increase in the price of goods is the inability to source them. Similar supply chain issues are plaguing the acquisition of construction equipment. The ABC cited that builders have to source products from not only one or two suppliers, as they did in the past, but five or more, to make sure that they get everything they need.
Coronavirus not only caused a slowdown in air traffic, but in shipping by sea as well, and even shipping across state lines.
Fewer Funds for Government Projects
One area of the construction business that has remained relatively constant has been public works and infrastructure but forecasted to change. A report from the Brookings Institution projects that government revenue will decline $155 billion in 2020 (5.5%), $167 billion in 2021 (5.7%) and $145 billion in 2022 (4.7%.)
This means there will be less money for roads, bridges and transit. As an example, the report cites the New York Metropolitan Transportation Authority, which, even with relief money, is facing an $8.5 billion shortfall in 2020 and 2021.