Dive Brief:
- Associated Builders and Contractors Chief Economist Anirban Basu said the Federal Reserve’s tightening policy to fight inflation will likely drive the economy into recession either later this year or at some point in 2023.
- In the association’s monthly release on construction material costs, Basu pointed to construction input prices that are up 21.4% from a year ago, while nonresidential construction input prices were 21.9% higher. Overall construction costs rose 2.3% in May compared to the previous month, according to an ABC report.
- Those cost increases largely stemmed from supply-side issues, such as the war in Ukraine, rising energy prices and manufacturing and distribution issues in the supply chain. “But what the Federal Reserve most directly affects is demand for goods and services, not supply,” Basu said in his statement.