Sources: Portland Cement Association, Skokie, Ill.; CP staff
The latest PCA forecast of U.S. cement consumption sees year-over-year gains of 2.6 percent and 2.8 percent in 2017 and 2018 versus uniform 3 percent levels projected earlier this year. Bad weather, especially in the high volume concrete markets of Florida and Texas, coupled with lower anticipated public construction sector budgets are behind the more modest growth outlook.
“Once infrastructure and tax reform initiatives take hold and affect economic and construction activity, then we can expect growth in cement consumption to accelerate to higher levels,” says PCA Chief Economist Ed Sullivan. The updated forecast assumes tax reform and a $250 billion national infrastructure program under the Trump administration and Congress on a mid-2019 timeline, he adds.
The dual fiscal stimuli will accelerate GDP growth, construction spending and cement consumption. Rising inflation will necessitate a stronger Federal Reserve reaction, however, and could spur a rapid and perhaps larger-than-expected increase in interest rates. “Construction is an interest-sensitive sector and a slowdown—perhaps a decline—in activity is expected beginning in late 2021,” Sullivan notes.