By Michael Roth – January 17, 2025 – RER
Mircea “Mig” Dobre, senior analyst – machinery & diversified industrial institutional equities & research, Robert W. Baird & Co., talks with RER about the economy in 2025, nonres and residential construction, public versus private, what we know and don’t know about Trump’s policies, the opportunities and obstacles ahead and how they will affect the rental industry.
In a mid-December 2024 interview, Mircea “Mig” Dobre, senior analyst – machinery & diversified industrial institutional equities & research, Robert W. Baird & Co., talks with RER about the economy in 2025, nonres and residential construction, public versus private, what we know and don’t know about Trump’s policies, the opportunities and obstacles ahead and how they will affect the rental industry.
RER: What are your expectations for the overall economy in 2025, especially in regard to construction? According to the most recent note Baird published, the pace of growth will be slowing down some.
Dobre: The economy seems to be on pretty firm footing here going into 2025. All major indicators for activity seem to be pointing in the right direction, with the one caveat that manufacturing is where we’re seeing more of a struggle. And in the last couple of years, we’ve seen negative TMI (Trade, material and equipment) readings, but that is likely going to turn around in our view in 2025. The construction side of the economy is a little bit different because construction is fundamentally a backlog business, especially when you look at non-residential construction. And after some very strong years in 2022 and 2023 and the first half of 2024, we’re now starting to see the slowdown that’s related to the depletion of backlog at work. That has occurred due to multiple reasons but primarily because of higher interest rates and because the cost to build a building has increased as much as it has: More than 30 percent relative to pre-Covid levels. These are all effects that take a little bit of time to play through. But now we’re starting to see those effects.