Armed with an overall forecast even more pessimistic than that of President Obama’s top advisers, PCA Chief Economist Edward Sullivan offered a near-term outlook even more depressed than his original 2009 forecast released late last year
Source: Portland Cement Association, Skokie, Ill.
Armed with an overall forecast even more pessimistic than that of President Obama’s top advisers, PCA Chief Economist Edward Sullivan offered a near-term outlook even more depressed than his original 2009 forecast released late last year. Presented at a World of Concrete briefing last week at the Las Vegas Convention Center, Sullivan’s newest projections featured one bright spot–the anticipated softening of the downturn thanks to the economic stimulus package currently making its way through Congress, which he sees taking substantial effect in 2010.
Without any stimulus plan boost, Sullivan’s forecast has cement consumption dropping 15.1 percent in 2009, after a revised 13.2 percent drop in 2008. The no-stimulus outlook for 2010 is an 8.0 percent drop to 74.7 million metric tons, according to Sullivan. With assistance from a well-funded stimulus package–which Sullivan said needed to be greater than the proposed $775 billion–PCA expects 2009 consumption levels to drop 8.6 percent, followed by a 5.3 percent uptick in 2010 to 92.1 million metric tons. Sullivan estimated that the size of the stimulus 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. 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 is also operating under the assumption that all spending initiatives are in addition to the reauthorization of SAFETEA-LU at existing levels. He also reminds us 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.