What Will Be the Effect of the Election on the U.S.Construction Economy?

Thomas G. Dolan

January 2005

The 2004 presidential election was a cliffhanger. Everybody, especially the talking heads, said that no one could predict the outcome. In this, everybody predicted correctly. But everybody also said the results would be extremely close, and there was widespread concern that voting irregularities would keep lawyers on both sides very busy, and it might be months before the results could be determined. In this, everybody predicted incorrectly. George Bush won decisively, and John Kerry conceded early.

But now we’re bringing out the crystal ball again, and have asked some wall and ceiling contractors from around the country what the effect of the election will be upon the economy.

The responses were, well, predictable. Nary a vote for Kerry or the Democrats among them, even though those we interviewed were selected at random. But this doesn’t necessarily translate that Bush will be a positive force for the economy. Some think so, though with an occasional secondary misgiving. But some think whoever is in the Oval Office doesn’t really have that much impact on the economy one way or the other. The real consensus is that each of the respondents say the economy is good, and the outlook for the coming months is even better.

To start with the most solidly pro-Bush end of the spectrum and gradually work down to "it really doesn’t make that much difference who is president,” here is what Robert Burgess has to say: "I think the economy has thrived under Bush’s leadership and will continue during the next four years. I was happy with the outcome, and was certainly worried that it might go the other way.” Burgess, who is CEO of Cascade Acoustics, Inc., Tualatin, Ore., adds, "I’ve never seen the Democrats promote a strong economy, at least for small businesses. We would have seen additional regulations and certainly additional taxes, all of which would have slowed down the economy. A company the size of the Heinz Corporation would not be affected. Smaller businesses would be.”

Burgess says, "I think the economy is strong—certainly stronger than the past two to three years, and I think 2005 will be better, though I’ve learned not to predict much beyond that. Too many things can turn you into a liar if you predict too far in advance.”

Yet, if Bush’s leadership has been so great, why has the economy gotten better only now than in the past two to three years when Bush was also president? "It takes a long time for a new administration to get things moving in its direction,” Burgess replies. "It still has the tail end of the last regime to deal with. No matter which way the pendulum swings in the next election, that administration will have Bush’s policies carrying into it. "The machine is too large to change on a dime. It will usually not change that quickly, though 9/11 was an exception. That did change us on a dime. I’m certainly more comfortable on the issue of terrorism than I would have been with the Democrats in the same situation. There was a lot of courage in what Bush did.”

Everyone is Winning

For many observers, such as Jeff Snay, president of Pyramid Acoustics, Inc., Zeeland, Mich., the fact that Bush won is good, but perhaps almost equally important is that the uncertainty is over.

"I think the whole effect of the election on the economy will be positive,” Snay says. "The economy was becoming positive before the election, but because of the differing views of Democrats and Republicans, small and large business owners were kind of slow to move forward until they had a guarantee of who the next president would be.”

Because the uncertainty is over, Snay continues, "I feel the country is ready for business to continue. Kerry never specified what his plan was. But Bush has a track record. As president, Bush was convincing. He stood his ground. His morals are there. I feel the people spoke when they voted to have him come back. They feel they have solid ground to stand on. I feel both sides have good and bad areas. Hopefully they can work together across the aisles, whether Democrat or Republican. The biggest thing to remember is that we have to work together, not only for the common good of the country, but for the world as well. Whether we like it or not, we are in a world economy rather than that of just a single country.”

Yet it’s in terms of the world economy that Snay is not entirely happy with the current trend. "I don’t like the job loss in our country,” he says. "We’ve had a lot of manufacturing jobs leave the country. And that has had a very bad impact on the state and the country as a whole.”

Yet Snay also says, "No matter what it is in life, when things don’t go as planned, you have to be resilient, and do what you know is right. There’s no point crying over spilt milk. We have to figure out as a country what we’re going to do to get new here and protect them. We have to continue to refocus, to look at where we’re going as a country, to continue to stay strong. I believe that with Bush being re-elected, we are certainly on that road.”

The Fat Lady has Sung

For Fritz Reitter, president/CEO, Reitter Stucco, Inc., Columbus, Ohio, the main impact of the election is not so much that Bush won but that the uncertainty about the outcome of that event has ended.

"As far as we’re concerned, the main fact of the election is that it’s over,” Reitter says. "My guess is that the impact will not have a drastic effect in itself, rather it’s the feeling that the election is over so I can continue what I was doing. If Kerry had won, there still would have been some uncertainty. But we know what we had. I think everybody is expecting more of the same, without trying to figure out how the new guy will be.”

When asked about the economy, Reitter replies, "The economy, in general, is good. All the indicators point to that. The last few years have been very good for us. We expect it to continue and we’re hoping to do more of the same—and that nothing crazy happens.”

The one crazy thing that can happen, Reitter says, is in Iraq, "which can put a damper on the whole thing. There is the uncertainty about what might happen if that country is turned upside down.”

Bob Heimerl, president of Mowery-Thomason, Inc. in Anaheim, Calif., also says, "We have quite a bit of work at the present time, and the election will not much affect us one way or the other.”

Yet Heimerl also thinks it’s just as well that Bush got elected. "Bush’s being back in office will be a plus for business and the economy,” Heimerl says. "He’s more business-friendly and more aggressive in providing incentives for small businesses. If we get tort reform in California, that will be a great help.”

Steven Henricksen, president of D. L. Henricksen Company, Inc., Tacoma, Wash., also is inclined toward Bush but is ambivalent as to how much effect his re-election will really have.

"I feel the Republicans are less tax happy, and, over the long run, will allow more investment and growth; and everybody in our area think things will improve,” Henricksen says. "But in some ways it really doesn’t matter who is president because there are so many other controlling factors. But will having Bush being re-elected really help the economy? I can’t answer that. Who knows?”

If you do a Good Job

More certain that it really doesn't matter that much who's president is Greg Oaks, president of Oaks Brothers, Inc., Greenbriar, Ark.

"I personally don't think elections make that much difference," Oaks says. "Republicans struggle with Democrats, and each side may have areas they favor, but it really doesn't make that much difference.

"We started in business in 1994 when the Democrats were in office. The economy was just picking up. We went through two Democratic presidents. So now a Republican is in office. We may have been off 10 percent or so in any given year, but that's because of a job we thought we'd get but didn't. Our business was strong when the Democrats were in office, and was strong the past four years with the Republicans. I don't see why it won't be strong over the next four years."

Sharing similar thoughts is Stephen Donnelly, president of Stephen Donnelly Company in Edina, Minn.

"The election has not had any effect on us," Donnelly says. "Our business is strong. In fact, this is the best year we've ever had. Building in the Midwest is very good. Interest rates are low, people need to purchase homes, and builders have been busy.

"We've been in business 24 years," Donnelly says. "Our emphases changes from time to time. For instance, now commercial is down, but new homes and remodeling are way up. We just go where the market is and work very hard at sales. If you really work hard at sales, it doesn't matter who is president."

Unless, that is, you just happen to be the president of a construction company.