Armed with an overall forecast even more pessimistic than that of President Obama’s top advisers, Portland Cement Association Chief Economist Edward Sullivan
Armed with an overall forecast even more pessimistic than that of President Obama’s top advisers, Portland Cement Association Chief Economist Edward Sullivan offers a near-term outlook more depressed than his original one for 2009 released late last year. Presented during a (pre-economic stimulus bill passage) World of Concrete briefing at the Las Vegas Convention Center, Sullivan’s newest projections feature one bright spot Û the anticipated softening of the downturn, thanks to the infusion of stimulus funds for building and transportation projects, which he sees taking substantial effect in 2010.
Without any stimulus plan boost, Sullivan’s forecast had cement consumption dropping 15.1 percent in 2009, after a revised 13.2 percent drop in 2008. The no-stimulus outlook for 2010 was an 8.0 percent drop to 74.7 million metric tons, according to Sullivan. With assistance from a well-funded stimulus package Û which Sullivan contended needed to be greater than $787 billion Û PCA expects 2009 consumption levels to drop 8.6 percent. That would be followed by a 5.3 percent uptick in 2010, or 92.1 million metric tons. Sullivan estimated that a stimulus plan needed to be closer to $1.2 trillion to restore employment to January 2008 levels.
Major reasons for Sullivan’s more dire outlook are expected job losses that would materialize during 2009 and 2010. All totaled, PCA’s no-stimulus outlook suggests that in addition to the 2.6 million jobs lost in 2008, an additional 5.6 million jobs would be lost by the end of 2010, or a 10 percent nationwide unemployment rate. The President’s economic team projects only an additional 2.8 million jobs lost during 2009-10, or 8.8 percent unemployment peak. Furthermore, Sullivan sees little existing fiscal activity to offset mounting adversity. It is difficult to envision stronger economic growth being propelled by consumer spending, investment spending, net exports or government spending, he said.
Sullivan stressed a great deal of unknowns to his forecasting, especially in the realm of the exact amount of traditional infrastructure spending to be included in the stimulus package. He also is operating under the assumption that all spending initiatives are in addition to the reauthorization of SAFETEA-LU at existing levels. He noted that spending initiatives in this phase are assumed to be spread out during eight quarters, beginning in the second quarter of 2010, hence estimated cement consumption jumps of 5.0 million and 12.1 million metric tons in 2010 and 2011.