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Federal Guidelines released for “Opening Up America Again”

On Thursday, April 15, President Donald Trump released federal guidelines for “Opening up America Again,” his three-phase plan for getting the country back to work and more regular social interaction.

Contrary to a unilateral nationwide effort that he had previously touted, “Opening Up America Again” will rely heavily on governor discretion to implement county and state and wide.

Calling it a “gradual process” Trump did not specify any dates, but instead set safety requirements to be met at each phase.  Core state preparedness responsibilities hinge on testing and contact tracing, healthcare system capacity and plans to protect the health and safety of workers in critical industries, those living and working in high-risk facilities like senior care facilities, and employees and users of mass transit. They also address social distancing and face covering protocols and steps to limit and mitigate rebounds and outbreaks by returning to previous phases. There is an emphasis on protecting vulnerable populations such as the elderly and those with health conditions that would put them at greater risk.

Standard COVID-19 hygiene practices are advised and those who feel sick should stay at home and follow advice of their medical provider.  Guidelines are also recommended for all phases for employers, such as social distancing, temperature checks, restrictions on business travel and more.

“Gating criteria” is established before states or regions can continue to the phased opening. These include “downward trajectory of documented cases within a 14-day period” or a “downward trajectory of positive tests as a percent of total tests within a 14-day period (flat or increasing volume of tests).” For hospitals, it involves treating “all patients without crisis care” as well as putting “robust testing programs in place for at-risk healthcare workers, including emerging antibody testing.”

Each phase specifies guidelines for individuals, employers and specific types of employers.

Phase One

In Phase One, vulnerable individuals should continue to shelter in place and those in households with vulnerable individuals should recognize the risk of bringing the virus home from work or other public environments and distancing is encouraged. Distancing in public is encouraged, and gatherings of more than 10 discouraged. Non-essential travel should be minimized and CDC post-travel isolation guidelines should be followed.

Employers are advised to continue telework and return to work in phases, if possible, while closing common areas that would breed congregating. Non-essential travel should be curtailed  and special accommodations made for vulnerable populations.

Schools and organized youth activities that are currently closed should remain closed and visitors to senior living facilities and hospitals prohibited. Large venues like restaurants, movie theaters, sporting venues and places of worship can operate under strict social distancing protocols. Elective surgeries can resume; gyms can reopen if adhering to strict distancing and sanitizing protocols. Bars remain closed.

Phase Two

The second phase would kick in for states and counties with no evidence of rebound, satisfying the gating criteria a second time. Groups should still practice distancing in gatherings of no more than 50 people. Non-essential travel can resume. Schools and organized youth activities can reopen, and bars may reopen with limited standing room occupancy.

Phase Three

Areas with no evidence of rebound that satisfy the gating criteria a third time can move to Phase Three. This allows for vulnerable individuals to resume public interaction with appropriate distancing, and low-risk populations should limit time in crowded situation. Employers may resume unrestricted staffing of worksites. Only at this stage may visits to senior care facilities and hospitals can resume, with visitors practicing recommended hygiene protocols. Large venues (sit-down dining, movie theaters, sports venues and places or worship) can operate with restricted physical distancing. Bars may increase their standing room occupancy where applicable.

Governors will determine the appropriate timeline to begin this process, on a statewide or county-by-county basis as appropriate.

Read the guidelines at https://www.whitehouse.gov/openingamerica/

COVID-19 (Coronavirus) – Immediate Impacts on Construction Planning Mixed

Richard Branch, Dodge Data & Analytics, Chief Economist

The past two weeks have seen an unprecedented shuttering of the U.S. economy. Our expectations on the impact of the coronavirus on the U.S. economy have been significantly downgraded with a growing realization that the U.S. economy is in recession.

First-quarter GDP is likely to decline close to -0.1% on an annualized basis. Beyond that, it gets much more dire. We are anticipating an annualized decline of 6.3% for GDP in the second quarter as the effect of a shuttered economy fully takes hold. As a point of comparison, the deepest quarterly GDP decline during the Great Recession was an annualized -8.4% in the fourth quarter of 2008.

We presently expect a softer decline in the third quarter (-1.1% annualized) under the assumption that containment of the virus is working and some aspects of life return to normal. In the fourth quarter of 2020, we expect a return to growth of 1.5%. For the full year 2020, we expect economic growth to turn negative – declining 0.5%.

The full impact of the pandemic remains largely unknown. This creates larger forecast error and will result in ongoing adjustments to the forecast as we gain additional information.

The impact on construction activity is also uncertain, but it’s clear that it won’t be business as usual. There are several areas of the country where construction has been halted (like in Boston and Cambridge MA) and others where it has been curtailed (such as in San Francisco and Los Angeles where housing construction has been deemed an essential service). Some projects have been delayed, while others appear to be proceeding.

To gain better perspective regarding the immediate impact on construction, we have examined projects that are typically included in our leading indicator of construction activity — the Dodge Momentum Index. These are nonresidential building projects for which Dodge has just issued a first (or initial) planning report. Monthly tracking of these projects has shown them to lead construction spending for nonresidential buildings by a full year. Included in the analysis are nonresidential building projects, excluding manufacturing and transportation, with hard construction costs of less than $500 million.

Commercial Projects

Initial planning projects in the commercial building sector have seemingly held up during the first week of major economic impact (Mar 15-Mar 21). A growing number of people are working remotely, so it seems plausible that remote access has provided private firms with greater flexibility. Heading into the crisis, the economy was also on solid footing with strong hiring and real estate fundamentals (such as vacancy rates and rents). This should insulate — at least in the short term — the commercial sector’s ability to initiate the planning process by entering projects into the construction pipeline. In fact, the dollar value of commercial projects entering planning during the first three weeks of March compared to the same period of February shows little to no difference. From a regional perspective, however, commercial planning in the Midwest and West appears to have pulled back, while activity in the South seemed particularly strong last week. Regional definitions are shown here: https://www2.census.gov/geo/pdfs/maps-data/maps/reference/us_regdiv.pdf).

As the economy continues to rapidly turn south; however, the commercial sector could be more vulnerable to a pullback. The hotel and retail sectors, in particular, appear to be most at risk.

Institutional Projects

Institutional construction; however, has seen a more noticeable reduction in the dollar value of planning projects. Our Dodge data collection staff is reporting that as government offices closed in some areas of the country it has become more challenging to reach local officials. This could be a short-term issue as government workers adjust to working from home, but we cannot ignore the possibility that the public sector is becoming nervous about committing to future projects in the very uncertain economic environment. State and local governments are likely to come under increased economic stress this year as unemployed workers strain local safety nets and as tax revenues inevitably fall. To date, the pullback in institutional activity has been broad-based across regions.

While the events of last two weeks are unparalleled, the crisis is still in its very early days. The economic outlook hinges on how quickly containment efforts bear fruit. Fiscal stimulus, combined with the Federal Reserve’s recent moves, will also be key components that determine the trajectory of this recession. The effects will be felt strongly in the construction sector. To help you navigate these uncharted waters, Dodge Data & Analytics will continue to provide timely data and analysis.

To learn more, visit construction.com