A key factor in the degree to which the sector experiences a decline in 2021 as we still expect or avoids such an outcome will be whether or not the federal government can pass a major infrastructure investment bill. Promised through the past three administrations, but never fully materializing, the need for major infrastructure investment has been recognized by both parties, but is bedeviled by disagreements on allocations of resources and the funding sources and magnitude of money to be spent. While we continue to be hopeful that an agreement can be reached, we are, for now, assuming that any such bill will not be enacted in time to change the direction of 2021 business patterns in the sector. Based upon the assumptions about the course of the pandemic described previously and our analysis of current data, we estimate that the tribal construction sector experienced a decline of only 0.5 percent in 2020. For 2021, we still forecast a further decrease in tribal construction revenue from 2020 equal to 1.7 percent, as the lagged effects continue to build, leaving the industry 2.2 percent below estimated 2019 levels. In 2022, recovery is forecast to begin, with revenue up 1.4 percent from 2021. This will leave the sector only 0.8 percent below its 2019 level. Full recovery and new growth are expected to occur in 2023. This information is presented in the graph on the following page. Manufacturing The initial effects of the pandemic comprised shut downs in businesses representing end-point and intermediate-point demand for the manufacturing sector, particularly retail goods. Later and continuing negative effects have also been driven by viral outbreaks in various manufacturing businesses and by subsequent direct restrictions on employee spacing and operating procedures to reduce transmission. However, end user constraints continue to play the primary role, despite government attempts to stimulate production. The jobs-driven focus of much of the economic stimulus efforts preserved employment in manufacturing, but did much less to generate demand or maintain productive output. Application of the Defense Production Act to food processors and massive advance spending on vaccine production even before the vaccines had been approved partially mitigated other declines. A fourth quarter increase in exports and an increase in equipment purchases in the sector are positive signs. Aggressive credit boosting efforts and other monetary initiatives by the Federal Reserve and demonstrated resilience in the attitudes and spending of consumers and business leaders support continued expectation of recovery in 2021 and 2022. The potential for a shift in trade policy away from tariffs and trade wars, while yet to be proven, provides additional reason for optimism. However, potential inflationary pressure continues to threaten long-term recovery.
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