On the mining side of the sector, demand is slower to respond to the pandemic and mitigation efforts but by no means immune. Construction, manufacturing and other users of mined products have already been slowed by demand reduction for their end products and are likely to be slowed even further over the next six to twelve months as the lagged effects of the economic downturn fully impact their business models. As manufacturers reduce their demand for mined products, the mining sector will slow even further than it has to date. The lag works both ways. Even when demand for houses, buildings, cars and durable goods begins to return, it will take longer for the mining sector to reap the benefits. Government efforts to stimulate economic activity and loosen credit should help mitigate the impact, but only to a degree and only if the stimuli are applied either continuously or at least again when markets are fully reestablished. The recent stimulus efforts will not be sufficient to boost mining or extraction prospects next year or in 2022. Additional efforts will be required, as will be true across many sectors. The importance of the mining and extraction sector is not spread evenly across Indian country. For some tribes it is a critical component of their economies, whether directly or indirectly. For others, it is all but irrelevant. For tribes that are more dependent on the mining and extraction sector, their own economies will suffer doubly, both from the direct loss of business and from the impact of lost demand for other sectors due to lost employment and earnings in their area. Based upon the assumptions about the course of the pandemic described previously and our analysis of economic factors, prior business cycle patterns in periods of crisis, and the likely impacts of changes in operations and customer behavior, we forecast a decline in tribal mining and extraction revenue of 24.7 percent for 2020. For 2021, we forecast an increase in tribal mining and extraction revenue of 16.4 percent from 2020 levels as recovery begins, still leaving the industry 12.4 percent below estimated 2019 levels. In 2022, substantial recovery is forecast to continue, with revenue up 8.0 percent from 2021. While this still leaves industry revenue 5.4 percent below estimated 2019 levels, it will effectively represent full recovery by the end of 2022. Revenue levels in 2023 are expected to approximate pre-pandemic levels and surpass them on a month- to-month comparison basis by the end of the year. This information is presented in the graph on the following page. Construction Construction typically lags in any major downturn due to the lead time necessary to launch any major construction project, even single-family homes, which are typically developed in large clusters requiring various approvals and presales. Once a project is under construction, it is uncommon, although not unheard of, for construction to be suspended or abandoned. Hence momentum carries the sector for anywhere from six to twelve months even as demand falls. On the back end, planning and development efforts typically do not begin until evidence of demand recovery is already present. But construction itself may take months or years from the beginning of planning.
∴ PROGNOSIS
76
Made with FlippingBook - Online catalogs