Construction + Economy

2023 Economic Forecast

Very happy new year, and thank you for being a LightNOW reader. To create a summary of the 2023 economic outlook, I’ve reviewed several forecasts, both from inside the electrical industry and beyond. Here is my summary:

Nonresidential Construction:

  • AIA’s consensus forecast for the 2023 nonresidential construction market calls for a 6% increase.
  • 7% increase forecasted by FMI.
  • 9% increase forecasted by ConstructConnect.
  • 6% increase forecasted by Dodge Construction Network.
  • Wells Fargo Securities, Associated Builders & Contractors, and Markstein Advisors see nonresidential market growth coming in at less than a 3% increase next year.
  • AIA’s Architectural Billings Index (ABI) score for October was 47.7 points — the first decline in billings since January 2021.

Residential Construction:

  • Dodge Construction Network forecasts a 6% decline in residential single-family home construction.
  • Multi-family construction is also expected to slow, but according to National Association of Home Builder’s (NAHB) 2022 forecast, it will be up 18.1% in 2022 before declining 8% in 2023.


  • Dodge Construction Network forecasts US GDP to have a 0.7% increase.
  • Electrical Wholesaling publishes their ElectroBusiness Conditions Index (EBCI), a monthly survey of NEMA executives. The EBCI Index has been sliding deeper into negative territory in 3Q 2022, attributed to higher interest rates, geopolitical risks, and higher material costs. Electrification and energy efficiency are positive trends.
  • The Conference Board said CEO confidence sunk further to start Q3 and is at its lowest level since the Great Recession, while the association’s US Leading Economic Indicators report said a recession is likely before year-end.
  • Year-over-year price increases for electrical products are decelerating but remain at near historically high levels, according to Electrical Marketing’s monthly Electrical Price Index (EPI).


  • Electrical Marketing’s EPI shows no price change for Lamps, Industrial Fixtures, and Residential Lighting, from September to October, 2022, however, those lighting category prices had gone up between 6-9% over October, 2021.
  • Lighting controls are still experiencing significant long lead times.

Federal Incentives:

  • Federal infrastructure spending programs will spark investments in infrastructure, renewables and construction of massive factories to produce semiconductors, electric vehicles and lithium batteries for EVs, photovoltaic systems, and microgrids. Funds from federal programs like the Infrastructure Investment and Jobs Act (IIJA), CHIPS and Science Act, and the Inflation Reduction Act (IRA) will have a direct impact on the electrical construction market because of their intent to fund the installation of residential and commercial PV systems, microgrids, EV charging systems, grid upgrades, and renovation of commercial facilities with more efficient electrical and mechanical systems.
  • Section 179, which covers the Energy-Efficient Commercial Building Deduction, the IRA will almost triple the per-sq-ft tax deduction in 2023 that building owners can get for energy-efficient retrofits in commercial or multi-family building from $1.88 per sq ft to $5 per sq ft.

Growth Markets:

  • Markets with projected growth include:
    • Life science labs
    • Data centers
    • EV battery factories
    • Semiconductor manufacturing campuses
    • EV manufacturing plants
    • Transportation infrastructure

For more on the 2023 construction forecast, see EC&M here (free account required).

For more on the 2023 electrical market forecast, see Electrical Wholesaling here.

For more 2023 Economic Outlook, see Industry Week here.

Image: EC&M

Image: NAHB



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