Education market still earning honor roll mention
Builders completed more than $62 billion worth of U.S. educational facilities during 2001, an increase of 13 percent over the total for 2000. This growth was identical to the growth rate recorded between 1999 and 2000, so there's no disputing the "star" status of the educational sector.
School construction continues to grow at an extremely healthy pace, regardless of the prevailing macroeconomic environment. And the combination of favorable demographic trends, aging educational infrastructure, and the policy priorities of President Bush and Congress should ensure solid gains through the next five years.
Last year, publicly funded school construction made up more than 79 percent of the total spending. After increasing by 11.8 percent in 2000 to $43.6 billion, public school construction spending rose by an even stronger 13.3 percent in 2001 to $49.3 billion.
After relatively no growth in 1999, spending in the private education sector jumped 17.7 percent in 2000 to $11.4 billion, and by another 11 percent in 2001 to $12.6 billion.
In the year ahead, there certainly is the potential for a significant slowdown in the growth rate for school work spending. Underlying demand from demographic trends and federal initiatives remain strong, but state and local budgets are under increasing downward pressure. Tax revenues have declined sharply in most states and metro areas, with the onset of recession and the chilling effect of Sept. 11. As a result, a larger share of increasingly scarce tax dollars will go to public safety spending.
However, the bottom is unlikely to drop out of the education market. Growth in the market on the whole will slow but not stall during 2002-2003. Gains are likely to fall short of their recent double-digit growth "standard," but activity will remain strong.
Indeed, demographic trends support solid gains for public construction. And should the U.S. Supreme Court uphold the legitimacy of most local school voucher initiatives, there is even potential for significant increases in private school construction.