economic impact of covid -19 on structural engineers › downloads › files › ›...

Andrew Opdyke, CFAFirst Trust Economics

ECONOMIC IMPACT OF COVID-19 ON STRUCTURAL ENGINEERS

John Cross, P.E., LEED APCrosswind Consulting LLC

ModeratorBill Bast, P.E., S.E.

Thornton Tomasetti

Kevin ArtlAmerican Council of

Engineering Companies

Perspective

Andrew Opdyke, CFAEconomist

This report was prepared by First Trust Advisors L.P., and reflects the current opinion of the authors. It is based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change withoutnotice. This information does not constitute a solicitation or an offer to buy or sell any security. The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, FirstTrust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial advisors are responsible for evaluating investment risks independently and for exercisingindependent judgment in determining whether investments are appropriate for their clients.

Source: Bureau of Economic Analysis. Quarterly data Q1 1948 – Q1 2020. Q2 2020 First Trust Forecast

-40%

-30%

-20%

-10%

0%

10%

20%

1948 1956 1964 1972 1980 1988 1996 2004 2012 2020

annualized percent change, real GDP

Source: Bureau of Labor Statistics. Monthly data Jan 2000 – May 2020.

125

130

135

140

145

150

155

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

employees on nonfarm payrolls, millions

Jan '08 - Feb '10:-8.7 Million

Mar '20 - Apr '20:-20.7 Million

Feb '10 - Feb '20:+22.8 Million

May '20:+2.5 Million

Source: Bureau of Labor Statistics. Monthly data Jan 2000 – May 2020.

50

60

70

80

90

100

110

120

130

140

2005 2007 2009 2011 2013 2015 2017 2019

Residential ConstructionNonresidential ConstructionResidential Trade ContractorsNonresidential Trade ContractorsHeavy & Civil Engineering Construction

index, January 2005 = 100

Housing Starts

Source: Census Bureau. Monthly data Jan 2005 – Apr 2020

0

500

1000

1500

2000

2500

2005 2007 2009 2011 2013 2015 2017 2019

thousands, seasonally adjusted annual rate

"normal" = 1.500 million

Retail Sales

0

20

40

60

80

100

2005 2007 2009 2011 2013 2015 2017 2019

General Merchandise Stores

Nonstore Retailers

billions

Source: Census Bureau. Monthly data Jan 2005 – Apr 2020

The App Economy

Source: Bureau of Economic Analysis. Quarterly data Q1 1960 – Q1 2020

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

1960 1970 1980 1990 2000 2010 2020

Structures

Software

percent of real GDP percent of real GDP

Source: The COVID Tracking Project. Daily data 03/04/20 - 06/07/20

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0

100,000

200,000

300,000

400,000

500,000

600,000

3/4 3/11 3/18 3/25 4/1 4/8 4/15 4/22 4/29 5/6 5/13 5/20 5/27 6/3

daily new tests positive tests % of daily new tests

Source: First Trust Advisors, Department of Labor, Redbook Research, Box Office Mojo, Association of American Railroads, American Iron and Steel Institute, Hotel News Now, Opentable, Transportation Security Administration, Energy Information Administration 1 Data for level, year ago level, and month ago level are all YOY % changes. 2 Data is provided daily instead of weekly. 3 Data shows year-over-year seated diners at restaurants on the OpenTable network across all channels: online reservations, phone reservations, and walk-ins. % change month over month is the current reading minus the month ago reading.

Crosswind Consulting LLC

The Design & Construction Market in an Interrupted World

John Cross, PE, LEED APCrosswind Consulting LLC

[email protected]


“That men do not learn much from the lessons of history is the most important of all the lessons of history.”

Aldous Huxley


Design Lag Starts Lag P-I-P Lag

FROM START OF ECONOMIC DOWNTURN

FROM START OF ECONOMIC UPTURNDesign Lag Starts Lag P-I-P Lag

1 QTR 2-3 QTRS 4-6 QTRS

3-4 QTRS 4-6 QTRS 5-7 QTRS


EXPANSION OVER SUPPLY

RECESSIONRECOVERY

2008

2019

2020

Rent Occupancy

Rent Occupancy

Rent Occupancy

Rent Occupancy

Design

Construction


EMPLOYMENT TO PRE-RECESSION LEVEL

2021Q26q

2023Q113q

2028Q234q

2008Q1 2014Q124q


GDP RETURNING TO PRE-RECESSION LEVEL

2023Q113q

2021Q14q

2021Q36q

2007Q3 2011Q215q


MEANINGLESS SPECULATION

Optimistic

Middling

Pessimistic

Dow

ntur

nRe

cove

ryDe

sign

Star

ts

Construction Put-in-Place


ARCHITECTS BILLING INDEX (ABI)


DODGE MOMENTUM INDEX


WHO LEADS?1. Historically - residential2. Great Recession

a. Industrialb. Limited help from infrastructure stimulus

i. Too narrow of a focusc. Renovation and Rehabilitation

3. 2020?a. Probably not industrial – oil price impactb. Maybe single family – if flight to suburbsc. High Tech (Data Centers & chip manufacturing)d. Renovation and Rehabilitatione. Warehouses


WAREHOUSE DEMAND

Percentage eCommerce Single Source JIT


IMPACT & RECOVERY


WHAT ABOUT ME AND MY FIRM?


WHAT ABOUT ME AND MY FIRM?

1. Larger firms pursued smaller projects, particularly public projects

2. There was a strong emphasis on renovation and rehabilitation

3. Firms and individuals with a specialization in a niche market did well

4. Firms and individuals with strong team relationships with owners, architects and contractors (general and specialty) prospered


Monthly columns are available at: www.peddinghaus.com

[email protected]

http://www.peddinghaus.com/

National Council of Structural Engineers Associations & the Structural Engineers Association of Illinois

Economic Impact of COVID-19 on Structural Engineers

Kevin ArtlPresident and CEO

American Council of Engineering Companies of Illinois

NATIONALTRAVEL

Highway Trust Fund Receipts

May 2019 $3.238 billion

May 2020 $ 674 million

Federal Highway Miles Traveled

April 2019 169 million miles

April 2020 57 million miles

79% Decline

40% Decline

Region Total Travel

Percentage Change

North-East 20.2 -46.7South-Atlantic

36.3 -41.2

North-Central

38.5 -38.2

South-Gulf 36.3 -35.9West 38.3 -39.3

STATE DOTS

• Stay-at-home orders are being followed—significant traffic declines.

• Forecasting a 30% decline in transportation revenue over the next 18 months.

• Significant projects across the nation being postponed and delayed.

• North Carolina DOT postponed 100 projects valued at over $2.2 billion. Ohio, Missouri and others postponing projects as well.

TOLLWAYS

• 128 Toll Facilities covering 6,300 miles of road and generating $20 billion annually in revenue.

• Same challenges as DOTs—lack of traffic equating to loss of revenue.

• Forecasting a 50%-90% decline in traffic and revenue.

• Bond covenants governing most toll facilities will require tough choices of these entities in the immediate future—reductions in workforce, delay in capital programs, toll increases or a combination of all of the above.

COUNTIES &CITIES

• Counties anticipate a $144 billion impact through 2021.

• Cities estimate a $360 billion impact through 2022.

• Key revenue generators, like sales tax, fees, income tax, gaming are all at risk.

• Cities and Counties are reallocating spending for health and human services—postponing, delaying or cancelling capital projects.

MASS TRANSIT

• New York Subway ridership down 75%

• San Francisco BART ridership down 94%.

• Illinois Metra ridership down 97%

• Nationally-public transit ridership is down 75%.

What’s Needed?

State DOTs: AASHTO requesting $50 billion for State DOTs to offset

revenue loss.

Tollways: IBTTA requesting $9.2 billion for toll facilities to offset revenue loss.

Cities and Counties: The National League of Cities has requested $500

billion in direct aid and the National Association of Counties has supported

$187.5 billion in aid.

Mass Transit: American Public Transportation Association has requested an

additional $23.8 billion in aid (received $25 billion in CARES Act).

H.R. 6800( P A S S E D H O U S E )

• State Aid: $500 billion

• State DOTs: $15 billion

• Local Government: $375 billion

• FAA: $75 billion

• Mass Transit: $15.75 Billion

What’s Coming?

SURFACE TRANSPORTATION REAUTHORIZATION

$319 billion Federal-Aid Highway Program

$105 billion for Transit

$60 billion for Rail Programs

$5.3 billion for Highway Safety

A 5-Year, $494 Billion Program

What’s Coming?

THANK YOU

Andrew OpdykeCFA

First Trust Economics

Q & A

John Cross P.E., LEED AP


ModeratorBill BastP.E., S.E.

Thornton Tomasetti

Kevin ArtlAmerican Council of

Engineering Companies

THANK YOU FOR JOINING US

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If you have any additional questions, please reach out to us at [email protected].

economic impact of covid -19 on structural engineers › downloads › files › ›...

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