2019 ROI First Quarter Edition 2019 - HIS Capital Group | Page 23

Moving from the consumer to the construction world, on May 1 st , the Commerce Department released their
estimates of the construction picture.
Overall, we’ve seen some down-ticking in the residential and private construction. The down-tick is concerning
given that we haven’t seen something like this without a pending recession. With that said, non-residential
construction and road/highways construction is booming. Concerns that construction is “overbought” may be
“oversold” at this point in the economy picture. And, if Trump and Pelosi can agree on a $2 trillion infrastructure
deal, we’ve got massive construction for a while on the horizon.
The strength in construction corresponds with a relatively low federal funds rate. We’ve never seen a recession
with the federal funds rate below 4%. With a top rate of 2.5% and no evidence yet that the Fed will raise rates for
the remainder of 2019, this puts any potential Fed-induced recessions on the horizon.
22
HIS Capital Group