The housing market, an economic stalwart in 2001's weakening economy, will exit stage left with a better-than-expected performance that has surprised some economists.
On Dec. 17, the National Association of Home Builders announced that its Housing Market Index for that same month jumped eight points, the largest monthly leap since 1998. The group's chief economist was adjusting annualized housing figures for 2001-03 on that news, which translated into 1.6 million starts for 2001 in a revised fourth-quarter estimate. In his reworked pattern, David Seiders predicts 1.6 million annualized starts each in 2002 and 2003.
``It's a great success story if it all works out,'' Seiders said in a Dec. 18 telephone interview. ``It's a flatter pattern, we're clearly getting a better fourth quarter and I will move the first quarter  up a bit. It'll kind of flatten things out, and that will put all annual numbers close to 1.6 million, which is kind of unprecedented performance through a period where you're registering an economic recession.''
Overall, 2001 was not bad for housing and remodeling, which maintained stability thanks to all-time low interest rates, a warmer-than-expected winter and, yes, even Sept. 11 as more people chose to spend on home projects in place of travel, officials said. Seiders predicted minus 2 percent gross domestic product growth for the fourth quarter of 2001 and minus 0.5 for the first quarter of 2002. During the first three quarters of 2001, GDP increased at an annual rate of 0.2 percent, the lowest rate since 1991, according to the U.S. Bureau of Economic Analysis.
Even before December's HMI figures were released, the consensus was that construction was not having a particularly horrible year in the wake of an already-weakening economy and the terrorist attacks of Sept. 11. Still, plastics firms in all sectors are looking to 2002 for an increase as the economy recovers. Seiders predicts the recession will end within the first quarter. Some plastics firms share his optimism.
``We think the vinyl siding market will grow next year,'' said Jim Ziminski, vice president of sales and marketing for Columbus, Ohio-based Crane Performance Siding. ``Our last couple of months have been really strong.''
The PVC pipe market was hit hard in 2001 as firms lowered sales prices under declining resin prices. Excess inventories arose in late 2000 and plagued firms until easing began in late 2001.
Publicly held PW Eagle Inc., based in Minneapolis, has survived eight recessions since World War II, said William Spell, chief executive officer. Officials remain hopeful for a better 2002 after 18 consecutive months of decline in the business, he said.
``Do we expect the unfavorable economic conditions we're in now to continue indefinitely?'' Spell asked Nov. 16 during the company's third-quarter conference call. ``I don't know. I don't think so.
``I think sometime, it's going to change. So we're planning for the worst and hopefully expecting better performance than that.''
The vinyl window market has gotten its boost from changing energy codes, especially in the South. Kent, Wash.-based extruder Mikron Industries Inc. is adding capacity now to gear up for 2002.
``We did add capacity in 2001 and we will add capacity again in 2002,'' President Paul Warner said. ``I think  is going to be a little slower than we'd like to see for the first half, but we expect an overall [sales] increase over 2001 in the range of 10-plus percent.''
Telecommunications has taken a hard hit this year as the money from Wall Street no longer is readily available, although officials predict a resurgence in the latter half of 2002.
Financial analyst ABN Amro North America Inc. reported that North American telecommunications firms are expected to cut capital spending by 29 percent from 2001-02, according to Ken Simonson, chief economist with the Associated General Contractors of America, based in Alexandria, Va.