There is a lot of talk these days about how the economy is doing. Are we at the bottom? Is the situation beginning to turn around? In the development business, the surveyor has long been the economic bellwether. Surveyors hold a very visible profession-a large portion of their work is conducted outdoors on roadways and in the field. They are also a service-oriented profession, which means that a project must be moving forward for them to be on site.
As I travel the country in my consulting and training, I am always searching for national trends and regional strengths and weaknesses. To assess the health of a local economy, I generally look for surveyors. As it happens, I am writing this while working on an engagement in Los Angeles. Combining the evidence on this trip with other recent trips leads me to think that nothing has turned around yet, nationally speaking. Are we at the bottom? I would suggest yes, but we are a long way from prosperity in land development, and the bottom could stay flat for a while. Too many surveyors are still out of work.
The stimulus is helping some organizations but doing nothing for others. Infrastructure engineers are busy, and I was told this weekend by the VP of a large design firm that their revenues for this year are at least as good as last year. Their work for the U.S. Army Corps of Engineers has increased significantly. However, land development is still off and has little hope of re-emerging in the near term.
One exception to this appears to be Houston. Houses are still being sold, and design is still lively. Several trends account for this: 1) federal money is still coming to the city from Hurricane Ike, which hit the city about a year ago causing construction; 2) oil money is strong, albeit dropping lately; 3) the school systems expanded construction when an influx of Hurricane Katrina afflicted residents moved to Houston, and funding followed; 4) the city didn’t have a huge upswing in housing prices over the past several years like other areas and is therefore less susceptible to the current downswing; 5) the town is still growing fairly rapidly; and 6) land development can occur unabated because the city is blessed with plenty of land for expansion, which keeps costs down as development moves farther away from downtown.
Some of the government surveyors in California are telling me that they seem to be all right for the remainder of 2009; however, the situation could turn grim for 2010. They have a new budget that will kick in soon, and it could bring a whole new atmosphere with it because cuts will be significant. That appears to be a common sentiment among the people I have talked to in various regions over the past couple of months. At the beginning of the year, the sentiment seemed to be “survive in ’09;” however, some individuals believe that the 2009 stimulus simply postponed the reckoning that will now hit us in 2010.
Looking nationally, reports in this past weekend’s newspapers indicated that a hefty percentage of the stimulus money is going to state and local governments to keep their offices operating. Once this money is spent, the governments will have to deal with the fact that tax revenues have dropped substantially, and they will have to cut services (or raise taxes) to offset the shortage. So there is some basis to think that the stimulus may be postponing the inevitable.
However, I, for one, think the delay in releasing the bulk of the stimulus funding may carry over to 2010 and will continue to provide some level of work for civil designers and surveyors in both government and private practice. Surveyors will be the first to experience this increase in activity. After the surveyors are back to work, design should follow within a few months, and construction will follow a year or two later.
What do you think? Will business pick up heading into 2010? Is the surveying business still a reliable economic indicator? Please post your comments below.