A Good Week for the Economy and Pittsburgh Construction Market

Let’s start with the bad news. The number of people filing for first-time unemployment compensation continues to be high. Even as many other metrics of the economy are turning higher quickly (see below), unemployment claims remain stubbornly high. Last week’s total was down substantially from the week before, to 720,000, but the number of those on unemployment and extended unemployment stayed above one million for the week.

Now for the better news. Friday’s Employment Situation Summary (i.e. the monthly jobs report) was a big surprise to the upside. Here’s an excerpt from the National Outlook column from the upcoming March/April BreakingGround:

Employers added 379,000 jobs in February, boosted by a gain of 355,000 jobs in leisure and hospitality hiring and the decline in infections. That bodes well for a strong recovery mid-year if recent loosening of mitigation measures does not trigger another surge in infections in spring. Among the nuggets of information below the headline: the number of people working from home due to the virus outbreak declined by 0.6 points; labor force participation remained weak at 61.4 percent; and the number of people reported not working because their employer closed due to the pandemic fell by 1.5 million to 13.3 million.

Economic news is better because the outlook for the pandemic is better. More than 2 million new vaccines were administered on 3 different days last week, bringing the 7-day rolling average to just below 2 million per day. That pace is advancing even as the manufacturing of vaccines is still in the ramp up stage. The other big driver of optimism is the passage of the $1.9 trillion American Relief Act, which passed Congress today and will be signed shortly by Pres. Biden. The bill includes $1,400 direct payments to people making less than $80,000 per year (or $160,000 as a couple), funds more COVID vaccine distribution, and provides a $3,600 child credit for 2021. Economists watching the progress have significantly upped forecasts for growth this year, with some (like Goldman Sachs) predicting GDP growth of 6%. Those more upbeat forecasts rest primarily on the fact that the U.S. consumer’s life is going to get much better if the current arc of things continues. With 70% of GDP coming from consumer spending, the charts below demonstrate why the bolder predictions seem plausible. Personal savings are up. Wealth was conserved (and mostly increased) during the pandemic. And those with the greatest need for assistance are about to get it. There are long-term risks associated with the amount of government borrowing and spending that has been required to support the economy for the past year. If, as many predict, Americans respond to returning to something like normal later this year, inflationary pressures could arise and put pressure on the economy in 2022. For now, those concerns are on the back burner.

Pittsburgh’s construction economy had begun feeling this optimistic outlook a bit before last week, but last week was a good one for the market too. Ahead of reviewing its Institutional Master Plan with the Pittsburgh Planning Commission, the University of Pittsburgh moved several of its $100 million projects off the back burner. Two of the major projects on the upper campus, which Pitt is calling Victory Heights, will begin moving forward again. The Chilled Water Plant, which will be built by Turner/Mosites, will get a guaranteed maximum pricing round within the month and is scheduled to start construction in September. The Human Performance Center, for which Massaro/Gilbane is the CM, will be designed over the next year or so, with construction in fall 2022. Construction is expected to start in October 2021 on the Hillside Student Housing and Garage, which Mascaro Construction will build. Mascaro is also CM for the Student Recreation and Wellness Center that should begin in spring 2022.

In other college project news, Mosites Constrution took bids on the $45 million Forbes Beeler dormitory at CMU. Duquesne University short-listed Rycon Construction and PJ Dick as CM finalists for the $50 million College of Osteopathic Medicine. Turner Construction was awarded the $8 million Google third floor renovation at Bakery Square. Shannon Construction was selected for the $3.8 million TI for Intervala at RIDC Westmoreland. F. J. Busse Co. will build out the new $1.5 million Huntington National Bank branch in the Strip District. Landau Building Co. was awarded the new Bank of America branch in Bridgeville. AIMS Construction was selectedfor the $1.2 million Africana Studies renovation at Pitt. Wyatt Inc. announced that it will build a new 120,000 square foot millwork manufacturing facility in South Huntingdon Township, Westmoreland Co. Whiting-Turner started construction on the 120,000 square foot buildout of the Goodblend cannabis facility at the Northside Commerce Center. Whiting-Turner also took bids on a $100 million buildout for Krystal Labs in Moon Township. Massaro Corp. was selected as CM for the $50 million Fifth & Dinwiddie West development in the Hill District. Rocky Bleier Construction Group started work on the $5-8 million Richard G. Laube Cancer Center expansion at Armstrong County Memorial Hospital.

In the public sector the airport’s Terminal Modernization Program got a kick start with the release of an $85 million steel and concrete decks package, due April 14. The Port Authority also released a $17 million Light Rail Transit Station renovation program, due April 1.

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