PCA tames projections for 2019, 2020 cement consumption gains

Sources: Portland Cement Association, Skokie, Ill.; CP staff

The PCA Market Intelligence Group cement consumption forecast paints a limited growth pattern from 2017 levels, with this year trending a 2.9 percent gain, followed by 2.6 percent and 1.6 percent bumps in 2019-2020.

“We are expecting relatively modest but sustained interest rate increases after 10 years of low and stable rates,” says PCA Senior Vice President and Chief Economist Ed Sullivan. “The Federal Reserve’s actions will gradually slow the construction sector’s growth due to higher mortgage rates for residential buildings and higher borrowing costs for nonresidential buildings. While the tax cuts passed at the end of 2017 have helped to boost the overall economy, rising debt will frame the discussion of future federal public infrastructure spending.”

PCA’s overall projection for the U.S. economy suggests considerable strength that will take time to unravel. The seeds of a gradual softening will surface from rising interest rates; emergence of state-level fiscal difficulties at a time of relative prosperity; and, aging of the recovery. PCA forecasts the GDP growth rate to be 3.1 percent this year, 2.7 percent in 2019, and 2.2 percent in 2020. The unemployment rate now below 4 percent is expected to trend down—intensifying labor shortages and leading to stronger wage gains.

“America’s economy is unquestionably strong and resilient,” Sullivan affirms. “The real GDP growth is healthy, wage growth is up, and both the unemployment rate and consumer household debt are at near record lows. While interest rates are rising, they have not reached a threshold that would cause a significant adjustment to the positive overall growth projections.”