Although recent economic news and activity may technically suggest an end to the current recession, the conditions facing the construction industry are likely to remain weak for another year or more, causing a drag on cement consumption, according to the most recent economic forecast from the Portland Cement Association.
PCA expects 2009 will represent this recession’s trough for total United State cement consumption — reflecting a 26.6 percent decline from already weak 2008 levels. A modest 5 percent increase is expected to materialize in 2010, with significant growth in consumption expected for 2011 and beyond.
“Given this weak outlook for private sector construction, any near-term turn in overall construction activity will be dictated by public construction,” said PCA chief economist Edward Sullivan in a press release. “Unfortunately, here state deficits are sterilizing the spending impacts of the federal economic stimulus plan.”
According to the Center on Budget and Policy Priorities, 33 states are in severe deficit positions for fiscal 2010, compared to 21 for fiscal 2009.
More than 90 percent of all highway and street spending is put in place by state and local governments. State fiscal conditions influence discretionary public construction spending, and the harsh economic environment facing state and local governments may result in a double-digit decline in discretionary highway and street spending during 2009, Sullivan said.