Based on a review of the latest multi-year capital plans and recent spending, government construction is projected to reach $12.3 billion in 2007, an increase from $11.9 billion in 2006. The Building Congress projects capital spending, including investments in mass transit, public schools, roads, bridges and other essential infrastructure, to reach $12.6 billion in 2008 and 2009.

According to the report, all of the current indicators are so positive that it is hard to envision a significant deterioration in construction activity during the forecast period. Most of the major public construction projects are adequately funded through 2009, and the majority of major office construction projects, such as Goldman Sachs and the World Trade Center site, are not dependent upon swings in the economy.

Anderson notes, however, "there is no mistaking the warning signs on the economic horizon and the potential negative impact of a worsening national economy and tighter credit markets. While New York City has worked hard to diversify its economy, the financial and real estate sectors still play an outsized role. A prolonged slump on Wall Street would decrease tax revenues and likely create downward pressure on the region's capital programs."

In its forecast report, the Building Congress notes that it will be important to keep an eye on the effects of such intense demand for construction labor and materials. While the appetite for construction has not yet shown signs of abating as a result of construction costs, which are rising at about 1% per month, the question remains at what point developers and government might find building in New York City to be cost-prohibitive and start scaling back.

The New York Building Congress prepared the construction outlook with the assistance of Regina Armstrong of economic consulting firm, Urbanomics. It incorporates reviews of private construction data as well as public capital budgets and plans at the city, state and federal levels.