ACEC Research Institute Economic Report Optimistic About Future

October 17, 2022

ACEC Research Institute Economic Report Optimistic About Future

Jon Gray, chief economist of the ACEC Research Institute, and Joe Bates, a research consultant for the institute, introduced their optimistic industry-wide economic assessment and forecast for 2022 to a Fall Conference audience.

“We had a very good year, the engineering and design services industry, rebounding from the pandemic in 2021,” Gray said during the joint presentation during the Monday General Session.

Jobs and total employment in the industry last year are up just over 2% year over year. This increase in jobs translates to 1.53 million jobs in 2021, compared to 1.5 million in 2020.

“I think that a couple of the numbers that jump out at me…is that we have a lot of really good paying jobs,” Bates said. “And we maintained that through the pandemic,” he said.  “We snapped back from the recession.”

“The industry actually accounted for about $558 billion in new U.S. gross domestic product,” Bates added. Translated, each dollar of industry revenue contributes $1.50 to gross domestic product. That GDP that we produce as an industry is roughly equal to 3% of all U.S. GDP,” he said.

Where is the industry headed? 

The economic outlook for the engineering and design services industry was bearish compared to growth from previous years. Nevertheless, there is a measured optimism.

“I can tell you that this year is more challenging than any other we’ve had in recent history in terms of the direction that we are headed right now,” Gray elaborated. “There is a fair amount of pessimism, and I think rightfully so about a number of things that we are looking at.”

“We continue to see really strong growth in the industry,” he explained, but remained hesitant to point to year over year double digit growth based on the numbers outlined by the forecast.

In 2022, Gray said that the industry should expected 11% in nominal output (revenue). Growth is expected to continue over the horizon of the forecast, but that growth will slow down. For instance, the total forecast indicates that growth will slow to 6.1% in 2023, and 2% in 2027.

IIJA a safety net and challenge

“Inflation is really taking a bite out of revenue right now,” Gray said. Fears over recession were also addressed, with both experts adding the passage and rollout of the Infrastructure Investment and Jobs Act (IIJA) is a boon.

IIJA creates a floor for the industry, both explain. IIJA although rollout has been slow since its passage.

The ACEC Research Institute projects that the benchmark infrastructure law will generate $132 billion in incremental revenue for the industry over the next five years.

“That really is a lifesaving lifeline for the industry,” Bates added.

“Now, one of those challenges is that some firms who are more heavily in the public sector are going to do really, really well if we are headed into a recession. But firms that are not as well diversified or are smaller firms…you can have more challenges in the next year,” he added.

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