Sacks @ 00:39:58Wrong
economy
The sharp impact of 2022 Federal Reserve interest-rate hikes on the U.S. construction industry will propagate to the broader U.S. economy with a lag of approximately 6–9 months, meaning broader economic weakness from this channel should be clearly visible by early-to-mid 2023.
So the construction industry is really the bellwether. When a recession starts, they're the ones who are first impacted. But it's probably going to take 6 to 9 months.View on YouTube
Explanation
Evidence shows that while Fed rate hikes in 2022 did sharply hit parts of U.S. housing/construction, the broader U.S. economy did not exhibit clear, economy‑wide weakness by early‑to‑mid 2023.
- On the construction side, single‑family housing starts fell 32% from March–December 2022, and single‑family units under construction began their fastest sustained decline since 2006–09 starting in mid‑spring 2022, consistent with a strong and early impact from Fed tightening on that segment of construction. (fredblog.stlouisfed.org)
- However, macro indicators in early–mid 2023 remained very strong:
- The unemployment rate was just 3.4% in April 2023—matching the lowest level since 1969—and stayed in the mid‑3% range through mid‑year, indicating a very tight labor market rather than broad weakness. (bls.gov)
- Real GDP grew at a 2.2% annualized rate in Q1 2023, and for all of 2023 real GDP expanded 2.5%, faster than in 2022, which is inconsistent with a recession or clear economy‑wide downturn. (bea.gov)
- Retrospective assessments note that the widely predicted 2023 recession never arrived; instead, the U.S. economy “defied expectations” with solid growth and a soft‑landing narrative. (investopedia.com)
- Even within construction, employment was not collapsing in 2022–23 in a way that would signal a broad downturn: BLS reports construction employment reached an all‑time high of about 8.0 million jobs in 2023, surpassing the 2006 housing‑boom peak, and AGC data show 45 states added construction jobs between June 2022 and June 2023. (bls.gov) Other analysts explicitly described this cycle as unusual because homebuilding and construction employment proved more resilient than past tightening episodes, helping explain why GDP and job growth “kept on chugging” despite sharply higher rates. (axios.com)
Because the predicted broad economic weakness by early‑to‑mid 2023 did not materialize—the economy remained in expansion with very low unemployment and positive GDP growth—the specific lagged‑propagation claim from construction to a clearly weak overall economy is best judged as wrong, even though the first step (construction being hit early) was partly correct.