The American Recovery and Reinvestment Act (ARRA) will have minimal impact on cement consumption and concrete output this year, owing to bureaucratic delays in releasing stimulus highway project funds and long lags between outlays and construction
Source: Portland Cement Association, Skokie, Ill.
The American Recovery and Reinvestment Act (ARRA) will have minimal impact on cement consumption and concrete output this year, owing to bureaucratic delays in releasing stimulus highway project funds and long lags between outlays and construction. In its most recent economic forecast, PCA projects a 22 percent decline in 2009 cement shipments against 2008 figures. Tempering that wallop will be ARRA-fueled projects and residential building recovery in 2010 and 2011, for which the association sees cement shipments rebounding 10.9 percent and 13.1 percent, respectively.
The letting of ARRA dollars has been slower to develop than expected. A sustained and dramatic escalation of outlays must occur if a sizeable increase in highway construction is going to materialize in 2009, says PCA Chief Economist Edward Sullivan. The residential sector has largely run its course as a significant cause of cement consumption declines and will start to be a strong contributor to growth in late 2010, early 2011. Nonresidential construction will continue to be a drag until the end of 2011.
Public construction, typically accounting for 50 percent of cement consumption, has been hampered by large state budget deficits, he adds, reflecting a perfect storm of adverse economic conditions, unemployment and attendant tax revenue declines. As jobs are created and consumer spending returns, public construction spending will rebound, but not until 2011.