The 2009 Construction Outlook Spring Update recently published by McGraw-Hill Construction, New York, says that while construction spending will drop to $463.1 billion in 2009, the decline will be cushioned by the recently enacted stimulus legislation, the American Recovery and Reinvestment Act of 2009.

Authored by Robert Murray, vice president of economic affairs for McGraw-Hill Construction, the report also said public works will see the most immediate benefit from the stimulus act, with construction starts climbing 10 percent. He expects a 15 percent rise for highways and bridges. Without the stimulus funding, Murray estimated that public works in 2009 would have fallen 10 percent, restrained by the deteriorating fiscal health of state and local governments.

“The economy has weakened substantially, and despite all the efforts last fall directed at thawing frozen credit markets, there's yet to be any sign that lending conditions for construction have improved,” said Murray. “On the plus side, the federal stimulus bill is now in place, which will provide quick support to public works this year.”

The 2009 forecast also calls for a 6 percent drop in institutional building because of the impact that the weak financial environment will have on educational and health-care facilities. The stimulus funding will provide a lift to military facilities and energy upgrades for federal buildings, moderating this year's overall institutional decline.

The revised forecast also says commercial building in 2009 will drop 27 percent, steeper than the 17 percent slide reported last year, and that residential building in 2009 will drop an additional 31 percent, continuing the three-year-old housing decline. Similar declines are expected for single-family housing (down 30 percent) and multi-family housing (down 31 percent).