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ASSOCIATIONINSIGHT Portable Sanitation Association International News BIWEEKLY EDITION FEBRUARY 3, 2021 Page 10 2021 Economic Outlook for Portable Sanitation…continued from page 2 Not everything happens at the same time though, and the projected growth rate is an average—the actual rate of growth will vary across industries. As you can see in the CB's quarterly chart at left, the biggest growth in general is likely going to be later during Q3. More specifically, residential investment growth of 7 percent is already underway in Q1, and we will see residential construction ramping up as spring draws closer. Residential investment in 2021 will far outpace the economy at large. Capital spending will likely ramp up in Q3 and Q4 after a slow start to the year. The Fed is not likely to increase interest rates in the foreseeable future. Hence the cost of borrowing money will remain low in 2021, and inflation is expected to be a modest 1.5 percent. However, the cost of employing people will outpace that, rising about 2.6 percent this year probably due to increased employer expenses for PPE, health insurance, and other costs of hiring and maintaining a workforce in the pandemic age. Construction Outlook Construction is one of the main drivers of portable sanitation business. As mentioned earlier, housing and residential investment will be strong in 2021, and more heavily weighted to multifamily dwellings. That's the good news. On the downside, the real estate recovery is projected to lag that of the broader economy, at least in some sectors. If you are used to having a lot of portable sanitation contracts supporting construction of office, retail, and hotel starts, those are going to be reduced significantly from pre-pandemic rates. The business and office market has been fundamentally changed. A lot of people are working at home now, and predictions are that many offices will be downsizing over the longer term. Many restaurants and other businesses have been lost. So there is considerable excess capacity in the office, retail, and hotel space at the present time. Portable sanitation companies should not expect a lot of new construction contracts in the commercial market in 2021. You may, however, see contracts available for building remodels due to changing office configurations driven by COVID. The demand for portable sanitation on construction and other job sites should remain high. There is no indication that the enhanced hand wash and service requirements we have been living with since the beginning of the pandemic are going away. Therefore, what operators may lose in number of commercial jobs sites could be partially replaced by increased equipment and service revenue on the sites they do have. Continued on page 11