Construction Economics Assignment Example | Topics and Well Written Essays - 1750 words

Construction Economics - Assignment ExampleThe exertion provides services such as maintenance, repairs and reclamation of existing structures.The effort comprises of three main sectors, which include spend a pennying kink, heavy and civil engineering and potency trade contractors. The building and construction sector includes contractors who build buildings for residential, industrial and commercial purposes. Heavy and civil contractors build roads, bridges, sewers and other major projects mostly link up to state infrastructure. Specialty deals with carpentry, painting and other works that relate to all types of construction. The industry teds to enter recessions first and often the last to recover. Most economic factors, which lead to recession, touch on the construction industry. Inflation is one of the major causes of recession where consumer goods become expensive go awaying to a drop in customer spending. In instances when the economy is expanding, there is increased co nsumer spending due to better wages and lofty disposable income. During the economic boom individuals have disposable income, which they use to buy durable goods and assets such as apartments and homes (Samuelson & Nordhaus, 2004 p. 56). In addition, the state acquires more tax revenue, which it utilizes by developing infrastructure. All three sectors of the construction industry indicate tremendous growth during this period. ... This happens in the initial stages of economic contraction. The Federal Reserve additionally, increases the lending take pass judgment and mortgage rates leading to reduced loans. The monetary control and inflation affect the construction industry even when they are in the early stages of inflation. The fluctuating interest rates results to an increase in the number of defaulters since they are unable to pay (Agapiou et al, 1998, p. 56). Federal Reserve increase in interest rates and reduced money supply result to weak caparison market. The increase in lending affects the housing market, which comprises of the building sector of construction industry. Those already building houses are unable to continue due to escalating prices brought by rise in energy cost and fluctuation of currencies. Economic recession to a great extent affects the construction industry even in the early stages due to initial reduction in customer sending that result to a decrease in the demand of housing due to oversupply. Recession affects the industry more when compared to transport, schooling and financial industries. In addition, housing prices fall leading to a rise in foreclosures. Schmalensee (1987) says that the recession results to a rise in unemployment and thus a decline in the number of construction works (132). An asymmetry in supply and demands slows the construction of residential building due to increase in interest rates. For exercising during 2007 recession total construction in United States declined by 28% (Department of labor). Durin g recession, the government reduces its spending since its cypher is normally under strain. This results to a decline in heavy and civil sector of the construction industry, which heavily relies with government projects such as roads and