Over the last six months, the deepening recession its accompanying credit crisis have dramatically changed the construction industry’s cost picture.

The economic crisis has gone global, slowing contruction markets worldwide and knocking back inflation both in the U.S. and overseas.

Record high oil and steel prices during the first half of the year were just starting to work their way into construction industry cost indexes when the financial meltdown on Wall Street threatened to drastically reduce the demand side of the cost equation.

Two to three years ago, some contractors began retiring diesel pickup trucks and replacing them with gasoline units in anticipation of the rising cost of cleaner diesel fuel and lower-emission engines. But many never expected diesel to lose its longtime price stability.

As bad economic news continues to mount it is becoming increasingly clear that last year’s subprime mortgage crisis is spilling over into the overall economy and could eventually threaten still healthy commercial and public construction markets.

The sub-prime mortgage disaster helped knock the wind out of construction inflation during 2007 by flooring the housing market.

It has taken nearly two years of steady declines in the housing market but the strong materials price escalation of the previous three years appears to have been knocked off balance.