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Home  »  Economic Outlook 2023  »  Economic Outlook 2023: Albrecht Jr.
Economic Outlook 2023

Economic Outlook 2023: Albrecht Jr.

Posted onJanuary 16, 2023
Thomas Albrecht Jr., vice president of operations, Hilltop Construction Co.

By Tom Albrecht Jr.

As we enter 2023, we cannot forget to look back at 2022. Hilltop Construction was able to have one its best years in its 46-year existence despite facing challenges. These challenges presented in leadership changes, inflation, material price increases, and labor costs.

The main issue in construction last year was the inflation of material costs to the housing markets. According to many sources inflation in the construction industry increased by over 14 percent for 2022. 

The projects were still coming in fast and furious even though inflation was sky rocketing. We noticed that we had to turn down many projects in 2022 due to costs, driving projects over budget. I would say it was the first time in many years that we were faced with these decisions.

The past several years the area seemed to be focused on labor shortage, Hilltop has done a great job at retaining over 30 employees. 

My concern moving into 2023 is that labor costs will continue to go up due to lack of new workers entering the construction field. Moving forward we need to encourage more students into entering construction industry.  According to the National Association of Home Builders, construction sector jobs in the U.S. increased by 248,000, a 3.3 percent increase since November 2021. We don’t have 3.3  percent of kids graduating high school or college that are going into the construction sector. This is scary going into 2023 as the labor shortage is going to continue to get worse.

In 2023, we will see material prices start to correct themselves by the second or third quarter. I believe the first six months of 2023 we will see a slowdown in construction projects. As the fourth quarter of 2022 just ended, we have already seen a shift in the number of projects we are getting calls on. 

For the last two years we have not been able to field all the calls coming in for new projects,  while in the last four months we have been able to manage all the calls. 

I was around for the crash in the construction industry in 1992, so I am well aware of signs of slowing industry.  In December, I reached out to all of the 10 architects we work with to see what the work load could look like for 2023. Much to my surprise, 2023 is looking like a great year, based on the continued pent-up demand cited by the architects.

Interest rates have increased many times in 2022. Based on the Wall Street Journal, 2022 was one of the worst years since 2008. Many developers experienced a slowdown in new house construction in 2022. Much of this is based on interest rates being at an all-time high, this makes it tough for first time home buyers. I expect that this will continue into 2023 with a possible correction coming in late 2023. Hilltop saw a shift from new construction to remodeling in the fourth quarter. 

I was taught many years ago not to be a one dimensional company, so Hilltop continues to get calls on new houses, commercial projects, remodeling, etc. 

What’s nice about the area that we live in is that we have many people that come to vacation in their lake homes or to visit our lovely Saratoga Race Course and this makes it so we don’t ever see a major downturn in our economy. I see that this will continue to increase as we enter a new year.

As we enter 2023, we expect to see the business continuing to grow as more people will hire companies with long standing good reputation and quality craftmanship even in times of slowdowns. 

Previous Article Study: Capital Region Employers Hire More Despite Recruiting, Economic Issues
Next Article Economic Outlook 2023: Mintzer
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