Understanding the Impact of Construction


The construction industry always has a significant impact on the economy. Construction projects are tied to businesses in a wide range of industries. A new building requires the services of architects, building suppliers, electricians, engineers, and retailers, just to name a few. When construction slows, it causes a drop in businesses for all connected industries. As individuals and companies start new building projects, they create jobs across the country. These projects tend to help the economy both locally and nationally, creating a ripple effect across a range of industries.

Indirect Impact: 

Construction requires planning, which creates jobs for architects engineers. Construction also requires tools and supplies, which creates jobs for people who manufacture excavation equipment, cranes, backhoes, lifts, lumber, cement and building supplies.

The impact of the construction industry goes beyond the erection of buildings. New houses and offices need furniture and appliances. Roads, commercial properties and homes all need landscaping, which creates the need for maintenance. The construction industry is at the core of this job creation process.

Direct Impact: 

The ebb and flow of the economy is based in large part around the construction industry. New home construction is particularly important. According to the Bipartisan Policy Center, residential house construction can account for 4.5 to 6.3 percent of the nation’s gross domestic product.

When this industry contracts, the impact is sufficient to send the economy into a recession. Economic recovery is also historically tied to the recovery of the housing industry.