President Joe Biden was sworn in today and whether he will be able to pass his campaign proposals through Congress will have major implications for the U.S. economy and construction industry in the years ahead.
Dariana Tani, economist at GlobalData, a leading data and analytics company, offers her view on the situation:
“Mr. Biden’s proposal to create a U.S. $2 trillion fund for infrastructure and clean energy, as well as his proposals to expand broadband networks in rural areas and plans to increase spending for housing, education and health care, if passed through Congress, this would provide a boost to the construction industry in the coming years.
“Passing these legislative proposals, nevertheless, will still be challenging for the new president given the Democrats’ slim majority in both the House and the Senate where most fiscally conservative members of Congress could be reluctant to agree to programs that increase the federal budget deficit.
“GlobalData expects the U.S. construction industry to grow by an annual average rate of 1.4 percent between 2021 and 2024, after increasing by an estimate of 1.5 percent in 2020. Record-low mortgage rates and the significant shift in remote working are expected to continue to support housing demand while the rollout of vaccines and prospects of an additional fiscal relief package present optimism to the short-term outlook.
“In the medium to long term, we expect, nevertheless, that longstanding issues, such as shortages of labor, expensive land and rising material costs, will continue to hold back investment in the industry. Although a less disruptive foreign trade environment under the new Biden administration is likely to benefit the industry from lower tariffs and somewhat limit the rise of construction material costs, which have increased substantially under the Trump administration.
“Furthermore, Mr. Biden is likely to be more open to immigration as he has promised to reverse Mr. Trump’s controversial policies. This could help address the shortages of skilled labor, which are causing wage inflation and leading to additional increases in project costs and home prices.
“After winning the U.S. presidential elections last November, Mr. Biden’s victory was tempered by fears that his policy agenda would be blocked by a Republican majority Senate at every turn. However, with Democrats winning the two Senate seats in Georgia’s runoff elections held on Jan. 5, Mr. Biden now has a far better chance to enact most of his ambitious policy proposals he campaigned on. Whether the president will be able to pass his legislative proposal through Congress will depend to a large extent on his ability to keep the Democratic party fully united behind any legislation and working with Republican lawmakers to find common grounds.”