ACEC Macro-Economic Update, Week Ending April 18, 2020

Industry News / Market Forecast

April 20, 2020

ACEC Macro-Economic Update, Week Ending April 18, 2020

Construction, Professional Services Firms are Leading Recipients of PPP Loans

Construction and professional services firms were the leading recipients of the U.S. Small Business Administration (SBA) approvals of Paycheck Protection Program (PPP) loans through noon EST on Thursday, April 16, shortly before the total $350 billion of funding was tapped out. At that time, more than 1.66 million loans had been granted, providing $342.28 billion to small businesses.

Construction was the largest industry sector with loans approved by total dollar amount, with 177,905 loans of nearly $44.91 billion (12.13 percent) approved.

The industry sector of “professional, scientific, and technical services”—of which architecture and engineering services is the second largest subsector by 2019 annual revenues—represented 12.65 percent of PPP loan dollars allocated, and led in the number of loan approvals, with 208,360 loans of $43.29 billion total.

IMF Adjusts 2020 Outlook, Expects 3 % Contraction

The International Monetary Fund (IMF) adjusted its world economic outlook, expecting a 3 percent contraction globally in 2020. Last week IMF held its annual Spring meetings with the World Bank Group (virtually), with a focus on the recession being caused by the COVID-19 pandemic.

“It is very likely that this year the global economy will experience its worst recession since the Great Depression, surpassing that seen during the global financial crisis a decade ago,” said Gina Gopinath, the IMF’s chief economist, during a press briefing. “The great lockdown, as one might call it, is projected to shrink global growth dramatically.”

NABE Forecaster Panel Expects GDP Drop in Second Quarter, Rebound in Third

The National Association of Business Economics (NABE) conducted an Outlook Flash Survey of 45 economic forecasters April 3-7, with the panelists predicting a continued sharp drop in the second quarter of 2020, followed by a slight rebound in the third quarter.

“The consensus is real GDP declined at an annualized rate of 2.4 percent in the first quarter of 2020 and will shrink at an annualized rate of 26.5 percent in the second quarter,” said NABE President Constance Hunter, CBE, chief economist, KPMG. “The panel is optimistic about a return to economic growth in the latter half of 2020, anticipating an annualized real GDP growth rate of 2.0 percent in the third quarter.”

She added. “Despite a sharp deterioration in labor market conditions, the median forecast suggests conditions will improve by the end of the year with support from aggressive fiscal and monetary stimulus, as panelists expect the Federal Reserve to hold steady on near-zero interest rates through 2021.”

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