Geotechnical Activity Index (Feb, 3, 2014)
The geotechnical activity index is a new index that reports on the geotechnical potential in each State within the US. The index takes into consideration the geotechnical activity and population in each state. The main objective is to track changes over time in geotechnical and foundation works. As with any index, the results do not necessarily exact but should be taken as approximations of reality.
The GAI index showed a marked increase in December of 2013, but a marked drop in the January 2013 which is likely the result of the big freeze that has halted many construction projects. Big infrastructure projects are underway in California, New York, Texas and other states. The pace of jobs creation though has been disappointing in December, and likely will stay at low levels in January. It appears that employers that have been reluctant to hire made some necessary hires. Big infrastructure projects are underway in many parts of the country waiting to get the go ahead from the design phase to bidding. Such projects will likely increase the breadth of geotechnical activity in the months to come.
2014 Geotechnical crystal ball
Forecasting a year ahead is always a challenge, especially when one considers that most forecasts look only at broader economics/construction and not geotechnical works. In 2014, if negative risks do not materialize, we expect that geotechnical works in the US will likely experience growth in the range of 6%. This growth will be controlled by general residential construction in Metropolitan areas and big infrastructure projects. Growth in major metropolitan areas will be driven by increased prices for real estate and from foreign demand. Other opportunities for growth may be provided in the energy/pipe line industry.
The primary risks lie with the status of the broader economy, and what happens with the money flow from the Federal Reserve to US bonds. In our opinion, the majority of this “money” influx has made it to the stock market and not to the real economy. However, what we perceive as a stock index price inflation will likely not continue forever and some correction is expected. The big question, is if we have a stock exchange adjustment will the construction industry and private investments falter? Also a big question is what happens to loan interest rates and when the era of cheap money will be ending.
The US government will likely trim deficit spending out of necessity, and some big infrastructure projects might take a hit as a result. One of the most sensitive projects to such adjustments is the California high speed rail, which we anticipate will finally get through 2014 scratched but alive. The most important issue is for micropolitical issues not to stand in the way of resolving long term fiscal issues. A new budget showdown in 2014 should be avoided in which case the US economy will still appear as a steady ship in the global arena.
Geotechnical Activity Index US
|District of Columbia||64.48||8.46||56.72||17.53||32.68||14.19||26.21||12.69||21.57|
Full table for Geotechnical Activity Index
* D.C. area display greater scatter due to the smaller population.