If you’re remotely like me, which is to say a worrier, you’ve been wondering when the next recession is going to hit. And if you’re a lot like me, which is to say the kind of worrier who makes Woody Allen seem mellow, you’ve also been wondering whether it’s a good idea to even mention the economy out loud. Because simply discussing the possibility of a downturn increases the likelihood of one occurring (in part, apparently, by hurting consumer confidence), and I haven’t wanted to jinx it.
Then the AIA released its June Architecture Billings Index statement, which points back to five consecutive months of declining or flat billings and a 10-year low in project inquiries. Gulp. AIA’s Consensus Construction Forecast came out five days later with far nicer news, predicting that while a few sectors (religious, for instance) will decline over the next 18 months, overall nonresidential will continue to grow (albeit more slowly next year than this year). A reprieve? Let’s hope. Nonetheless, I decided it was time to exorcise my fears by giving voice to them.
The news that a recession may be in the works—whether tomorrow or two years from now—shouldn’t come as a surprise to anyone. The current expansion began in 2009, and last month it officially became the longest in U.S. history. Until the Reagan era, the average boom period lasted less than four years, so one could safely argue that we’re overdue—and many in the know are saying just that. In a 2018 survey of chief financial officers, two thirds of them expected the economy to falter by the end of 2020.
Even the most out-of-touch practitioners ought to be aware that real estate development is a cyclical business, subject to unusually extreme ups and downs. And every adult should know that a recession is always waiting around the corner.
So what’s an architect to do?
Get educated, for starters. Proper preparation prevents poor performance, they say. You don’t have to read the Financial Times front to back every day. Just pay a bit of attention. Try listening to Marketplace on NPR occasionally, following Bloomberg on Twitter (appropriately, the handle is @business), or checking the major economic indicators and indexes from time to time.
The AIA Billings Index and Consensus Construction Forecast are superior tools, and alone worth the price of membership. There are dozens of others out there—the S&P 500, the Consumer Confidence Index, World Economic Outlook, our own Meyers Index—and trying to make sense of them all can be mind-bending. So we’ll be publishing a guide later this year. Indeed, moving forward, our Best Practices column will offer lots of ideas on how to prep for and get through a downturn, from the perspective of both firms and individuals. And we will monitor economic and political headwinds that threaten to blow us over the proverbial fiscal cliff: immigration and the labor market, trade wars and consumer prices, the maturing of the Chinese economy, and so forth.
The intention here isn’t to stoke fear. It is possible to anticipate a recession without darting back and forth, limbs flailing and hair on fire, shouting, “We’re all going to die!” The best way to manage a crisis is to prepare for it, calmly.