By Cass Jacoby.
In this Roofing Economic Outlook, Mischa Fisher, chief economist at Angi, and RCS President Heidi J. Ellsworth discuss everything roofing contractors need to know about what's happening in the economy now. In episode 5, Mischa and Heidi meet again to talk inflation, GDP, interest rates, legislation, new construction and the overall market.
First things first, GDP contraction — the last two consecutive quarters we have seen a contraction in GDP, yet the labor market is still strong. Mischa tells Heidi that this is essentially an economic debate.
“There're two things that are going on. The first is that everybody feels kind of a slowdown. Things were going crazy during COVID, booming. We weren't expecting that particularly in our industry and now it's slowing down,” explains Mischa. “Sure enough, in the GDP numbers we've seen two quarters of contraction, which is colloquially speaking what people typically think of as a recession.”
Mischa clarifies that the term “recession” doesn’t really have a hard and fast definition, which is why this debate of whether or not two quarters of contraction is signaling a recession or not is so highly contested. Thus, given the negative contraction that has been happening it makes sense that we are all questioning whether or not we're in a recession.
“The bearish case is the economy has a lot of debt in it. Prices have shot up. We've got a war in Europe, we've had inflation which doesn't make anybody feel good, that's going to hurt consumers and that this is going to trigger a pullback which will hit the labor markets and then you get a runaway effect and you have a recession,” says Mischa. “The bull case is household balances are good, the labor markets are holding up. People still have their jobs. It's still a tight labor market. People are still getting raises.”
That being said, Mischa is optimistic about our sector because of home equity. At current, we are at a wait and see level when it comes to labor markets. “Expect to pull back, but the economy will be up again and home prices will be up again in the future and build a business and think about your profession and your career and your capacity to do things in the long term,” says Mischa. “Think through the fundamentals of how your business runs rather than getting caught up in the day to day news cycle.”
Watch the Roofers Economic Outlook episode to learn more about inflation, expensive credit and why it might be wise to expand your services in the current economic climate.
Cass works as a reporter/writer for RoofersCoffeeShop, AskARoofer and MetalCoffeeShop. When she isn’t writing about roofs, she is putting her Master degree to work writing about movies and dancing with her plants.
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