2nd Quarter Economic Update

By Joseph Sullivan

“Optimistic uncertainty” is the prevailing view of our tED economic panel through the second quarter of 2015, as we discovered some interesting views not only of the overall economy, but the prospects for some regions and types of business.

In this update we are pleased to introduce a new panelist, H Kent Goetjen, U.S. engineering and construction leader at PwC.  Along with Kent are veteran panelists, Bob Garino, VP Commodity Services, Export Tax Advisors; Kermit Baker, Chief Economist of the American Institute of Architects, and Tim Gill, Deputy Chief Economist of NEMA.


Tim Gill gives us an overview of what to expect in the second half of 2015 and 2016, while keeping an eye on oil prices and non-residential construction.

Tim Gill, NEMA
One could be forgiven for confusing the financial pages with the script of the 1993 film Groundhog Day, as the U.S. economy experiences yet another episode in which expectations have been deflated. However, despite the weak start, we at NEMA think the economy is poised for a somewhat improved near term showing, with real GDP projected to expand between in the mid-2% range in both 2015 and 2016.


Kermit Baker sees signs of a rebound from the first four months of 2015.  He also has a positive outlook on commercial and industrial construction in the second half of the year.

Kermit Baker, AIA
Here at the AIA, the outlook is positive but unclear. We had hopes for April despite weak first quarter performance for nonresidential building activity. However, the AIA’s Architecture Billings Index for April was disappointing, as the score of 48.8 indicated a decline in design billings nationally. However, both new project inquiries and new design contracts showed significant gains, suggesting that design activity over the coming months should be increasing.


Kent Goetjen says mergers and acquisitions will make a huge impact on decision making for the rest of 2015, but a steady economy will lead to positive results.

Kent Goetjen PwC
Merger and acquisition activity in the engineering and construction sector give a unique window into the economy.  It slowed considerably in the first quarter from the near-record activity in 2014. Companies appear to be reevaluating growth opportunities in major markets as they digest the economic implications of the rapid deterioration in oil prices and consider the impact of the regulatory tightening.

Overall, the US economy has been steady. Going forward, low oil prices and expansionary monetary policies should support modest expansion, even as a lack of public funding for infrastructure projects is a risk.


Bob Garino says the disappointing first quarter of 2015 was “unsettling” but we should see a rebound over the rest of 2015.  He also expects to see a rebound in copper prices.

Bob Garino, Export Tax Advisors
We’ve gotten so many mixed messages about the health of the U.S. economy, especially the unexpectedly slow first quarter, that it’s all very unsettling.  However, we at Export Tax Advisors believe that the disappointing first quarter was an anomaly given that consumer spending, business investment, and home building all grew nicely. Nevertheless, the second quarter may also disappoint.


For a look at the full round-table discussion on the second quarter of 2015 and an outlook on all of these topics for the rest of the year, make sure you are checking out the “Economic Updates” on page 13 in the Current section of the July issue of tED magazine.

Joe Sullivan is President of JSA, he can be reached at or at (972)463-1125.



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