The future’s so bright … Don’t break out the shades just yet, but the outlook’s better than you’d expect given recent political shenanigans over lowering the federal deficit. “Do not underestimate the impact of pent-up demand,” says PCA’s chief economist Ed Sullivan.
Well, almost. Anyone who’s focused on the federal debt, fiscal cliff uncertainty, and rising gasoline costs is overlooking fundamental indications that the U.S. economy —and cement consumption—is poised to begin a multi-year growth streak.
Household debt at its lowest in 18 years. All-time-high corporate liquidity. Banks that are able and willing to lend. 150,000 jobs created every month despite all of the above. Falling commercial vacancy rates. Low inventories and rising home prices.
All these factors point to a huge amount of pent-up demand that the Portland Cement Association (PCA), presenting its 11th annual economic forecast of construction activity at WOC yesterday, anticipates will be released sooner than expected. In 2005, the organization bucked consensus by saying these factors were ominously off track—and was correct. Now it’s saying these basics are too strong to dampen.
“We’ve fixed the structural problems that caused the recession,” says PCA vice president and chief economist Ed Sullivan. “For five years, consumers paid their debt, business is more efficient, governments shed excesses, and banks have restored strength and credit quality.”
Hampered by continuing concern over fiscal cliff uncertainty, the year will start weakly. But by June or so long-delayed spending by consumers, businesses, and even government (300,000 metric tons are expected to be consumed by the last of American Recovery and Reinvestment Act of 2009 projects) will push GDP to 3%; job creation to almost 200,000; and an overall 8.1% increase in consumption—on par with 2012.
So while still below pre-recession levels, Portland and masonry cement consumption is expected to reach 82,604 and 2308 metric tons, respectively, and increase annually until hitting a total of 117,048 tons in 2017.