RV PRO

January '19

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166 • RV PRO • January 2019 rv-pro.com B U S I N E S S Housing Rebounds Yet another powerful driver of busi- ness and consumer sentiment, the housing market, should deliver good news in 2019. Moody's believes housing starts will rise by 19.4 percent in 2019, a substantial increase over the 7 per- cent expected to be clocked when 2018 are finally tallied. Median home prices should rise by 2.7 percent, slower than the 4.8 percent of 2018. The challenge for home builders is finding enough workers. "Residential construction as a whole remains bedeviled by a shortage of capacity," Koropeckyj says. "The unem- ployment rate for experienced construc- tion workers is at a record low of less than 5 percent, suggesting that con- struction labor for the U.S. as a whole is critically short." Shortages in workers with certain skills, such as electricians and steel-erection specialists, are par- ticularly acute. Indeed, the labor shortage contrib- uted to a leveling out of construction starts for new and existing home sales and multifamily housing, through the first half of 2018. "The construction industry has been operating at full capacity and is still struggling to reduce its backlog of proj- ects," Koropeckyj says. The coming 12 months should experience a rebound as new multifamily building ebbs, releasing workers for the less labor-intensive sin- gle-family category. A healthy retailing sector is an important factor in a growing economy, and here again the outlook is good. "The coming 12 months should be a good year for retailers," Hoyt says. Core retail sales are expected to grow 4.7 percent in 2019, a bit slower than the 5.0 percent growth expected when 2018 numbers are finally tallied, but better than the 4.1 percent increase clocked in 2017. (Core retail sales exclude the volatile auto and gaso- line segments.) Clouds Loom Troubles, as always, loom on the horizon. The major near-term concern for businesses is the rise of protectionist trade policies. "The growing uncertainty caused by the trade war is throwing a monkey wrench into a finely tuned system and creating volatility," Manzella says. A common cost-cutting measure – sourcing products from countries not subject to import tariffs – is no panacea, he warns. "Unless such companies can buy in large quantities, they often find that price points are higher," says Manzella. "As a result, they end up raising their prices to unfavorable levels." An equally troubling issue is the effect tariffs have on business confidence, says Manzella. "When companies are faced with an uncertain future they typically hold onto their cash, invest less and spend less, and that puts downward pressure on economic growth." Koropeckyj agrees. "Escalating trade tensions between the U.S. and China could dampen investment more than expected," she says. "Company profits may be squeezed by the higher costs of imports. Not only could affected There are a number of positive developments heading into 2019, including a rebound in housing starts, an uptick in employee wages and a healthy retailing sector. However, there are concerns that tariffs, a growing labor shortage and rising interest rates could cause economic growth to stall.

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