If you see anyone down in the dumps this week, tell him or her to lighten up! That’s because the news is only going to get better in the months and years to come.
“World of Concrete this year is unlike any World of Concrete I’ve been to in the last decade,” said Ed Sullivan, chief economist and group vice president with the Portland Cement Association (PCA). “There is a big broad burst of optimism that has been absent the last decade.”
Sullivan gave a very rosy and optimistic picture of the economy and about the construction industry earlier this week at the show. Much of the reason for the good news can be summed up in one word: jobs. “Job creation, job creation, job creation. That is what’s causing the growth,” he said. “Everything keeps getting better on the back of the jobs growth.”
And while many have expressed concern that wages remain historically low, Sullivan said more pressure in the labor market will result in “higher wage gains that will follow.” A higher stock market and greater appreciation in housing prices and a collapse in fuel prices will result in “remarkable gains in consumer confidence.” This is especially important because consumer spending accounts for two-thirds of the nation’s economy.
“We are seeing the healing of the deep wounds we saw during the recession,” he said, adding that U.S. gross domestic product will increase 3.2% this year.
Sullivan specifically anticipates portland cement consumption will increase 8% each of the next two years, from just over 80 million metric tons all the up to 120 million metric tons by 2019.
While single-family housing starts were disappointingly low in 2014, Sullivan expects 1.2 million starts this year, about doubling the pace in the depths of the Great Recession in 2009. “We have to remember the recession did a lot of damage,” he said.
Nonresidential construction is also tied to jobs. More workers will push up occupancy rates, which will result in improvements in this sectors. And every new worker results in a new taxpayer, and that will mean state and local governments will have more money to spend on road and infrastructure spending increases.
Finally, while the falling oil prices are a big plus for most consumers and the U.S. economy, they are a drag on states whose economies rely heavily in that sector. These are Texas, Oklahoma, North Dakota, and Wyoming.
Take a look at Ed Sullivan’s Economic Outlook Presentation from World of Concrete 2015.