Source: CP staff
Former Portland Cement Association Chief Economist and Senior Vice President of Market Intelligence Ed Sullivan remains a principal information source for cement, concrete and construction stakeholders through “The Sullivan Report,” a new Substack portal offering. “I plan to continue to assess the U.S. economy and how that relates to the construction and cement industries,” he tells Concrete Products.
Among inaugural Sullivan Report findings and projections:
- A third consecutive year of decline for U.S. cement consumption in 2025. Without a meaningful drop in mortgage interest rates, lower residential and commercial building activity could result in cement shipments receding below 100 million metric tons—a level not seen since 2019.
- The economy’s strength is easing. Typically, this should usher in a softening of monetary policy and lower interest rates. That in turn, should support a recovery in residential construction. Given the suppressed housing starts activity over the past several years, that rebound could be strong enough to lead a recovery in real construction spending and overall U.S. cement consumption.
Unfortunately, this rosy scenario is not going to happen. U.S. policies regarding trade, tariffs, and immigration have increased the prospects of higher inflation. This will delay any moves by the Federal Reserve to lower rates. In addition, the inflation premiums added to mortgage rates are likely to increase. Altogether, modest, if any, improvement in interest rates will materialize during the first half of 2025. Without a meaningful reduction in interest rates, the U.S. cement market will likely record a third year of decline. - Heightened inflationary pressures could be combined with a slowdown in U.S. economic growth and gradually weakening labor markets. Economic growth could turn negative. Some may refer to it as a recession, but in the context of rising inflation, this suggests a mild form of “stagflation,” where the economy concurrently experiences rising unemployment and inflation.
- Initially, the Federal Reserve will likely sit on the sidelines and keep interest rates unchanged. Only after the threat of a more significant decline in economic growth and labor market weakness raises its head, will the Federal Reserve slowly act to lower interest rates. Any action to cut rates will not materialize until the second half of 2025—if then. Initial steps to lower rates will be modest. This implies a policy of too little, too late to save a recovery for the U.S. cement market during 2025.