The New Economy Versus the Old Economy

Using these three paths as a framework, we can better under- stand the underpinnings of this turbulent transition for the E&C industry. Also, given certain expectations and knowledge, it becomes possible to examine exposure to different scenarios, strategize for an era of repricing, and prepare to pivot and take advantage of shifts in the marketplace. Yet, the recession and the eventual recovery will be uneven across E&C sectors, and we’re beginning to see that some will post growth, while others will see their business models shift drastically. At FMI, we’re beginning to talk about this as the new economy versus the old economy.

decline by 2026, despite the rise in total construction put in place spending. In 2012 dollars, construction spending remains below the 2005 peak and is almost 50% less than the current dollar forecast in five years. Given the current pressures, it’s not surprising that industry sentiment is declining across numerous sectors. FMI’s Nonresidential Construction Index (NRCI) and Heavy Civil Construction Index both declined 16% in the third quarter from the previous quarter. Both are showing that the industry expects contraction. The Construction Industry Round Table (CIRT) Sentiment Index dropped 20% quarter over quarter and 35% from the prior year’s third quarter.

Adjusting for today’s inflation of about 8.5% (8.3% in August), real construction demand will seem like an almost 20%

Exhibit 1: Total Construction Spending Put in Place (U.S.)



Constant 2021 Dollars



Constant 2012 Dollars







Source: FMI Q3 2022 Forecast, CBO long-term economic projections * Current dollars converted using CPI


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