Given these caveats, it may be surprising that most construction economists are betting on sanity. In the end, the crisis is not economic but political. Assuming Washington politicians also want recovery, then construction could see some real growth next year in addition to the modest rebound of 2012.

McGraw-Hill Construction is forecasting a 6% increase in new construction starts in 2013, following a 5% increase in 2012. The MHC forecast assumes the fiscal cliff will be avoided.

"This year, we saw the glimmer of a recovery in single-family housing, which joined a strong recovery in multifamily housing that was already under way," says Robert Murray, MHC's chief economist. He predicts the dollar value of single-family housing will increase 24% next year, following this year's 27% gain. The multifamily housing market is expected to increase 16% in 2013, following increases of 21% in 2012 and 32% in 2011.

"Commercial markets lost some momentum this year, but we think commercial-building starts will jump back by 12% next year," Murray says. "The institutional-building market continues to be weak, but we think it will bottom out in 2013."

"Construction markets are gaining traction and have turned the corner, but the big question is, will they be derailed by the fiscal cliff and the economy sliding back into recession?" Murray says. Just how serious this threat is can be seen in Murray's alternative forecast, which assumes the worst-case scenario for the fiscal-cliff outcome and the European debt crisis. That alternative forecast calls for total construction starts to decline 7%.

The most optimistic forecast for 2013 was presented by FMI Corp., Raleigh, N.C. It predicts an 8% increase next year in the dollar value of total construction put-in-place tracked by the U.S. Dept. of Commerce. A resurgent housing market is powering FMI's forecast, which calls for a 23% increase in single-family housing and a 31% increase in multifamily housing next year. It looks for the non-residential building market to increase just 5.0% next year, led by an 8% increase in health-care work and a 7% increase in commercial construction (see table, p. 32).

The National Association of Home Builders, Washington, D.C., also predicts a strong rebound in single-family housing next year. "We are seeing steady increases unassisted by tax credits, so we are pretty comfortable that these increases are sustainable and will continue," says Robert Dent, senior economist with NAHB. He predicts that housing starts will increase 25% next year and another 30% in 2014. "We believe that market fundamentals can support 1.4 million housing starts a year, but we probably won't hit that mark until 2016," he says.

Public works remains a concern in most forecasts for next year. McGraw-Hill Construction expects the dollar value of new highway construction starts to increase just 3% in 2013, after declining 10% in 2012. MHC also forecasts a 4% decline in environmental work.

The American Road & Transportation Builders Association, Washington, D.C., also expects sluggish growth in the highway and bridge markets. ARTBA forecasts highway paving work to increase next year just 2.4%, to $47.7 billion; that amount would still be well below the $51 billion recorded in 2010. "The new federal highway spending bill, MAP-21, provides some market stability, but there is no new money in the bill," says Alison Black, ARTBA's chief economist. "Any growth would have to come from state and municipal governments, and their financial situation is very serious," she says. On the bright side, ARTBA predicts there is enough funding to maintain last year's "record high" bridge market at around $28 billion, Black says.

The most pessimistic construction forecast for 2013 was put out by the Portland Cement Association, Skokie, Ill. Unlike FMI, PCA's forecast is adjusted for inflation and assumes the economy slips before regaining its balance next year.