Debt crisis, lack of highway bill affects cement consumption

Despite recovery momentum in late 2010, the U.S. economy is again in a slowdown. This will weaken construction activity and restrain gains in cement consumption until 2013, according to the most recent economic forecast from the Portland Cement Association (PCA).

PCA downgraded its cement consumption forecast to 0.2% in 2011, 0.4% in 2012, with a significant 16.4% increase in 2013. According to the report, uncertainty regarding highway spending legislation and government policy related to the debt crisis will cause a negative drag on construction activity for the next few years.

“Our previous forecast had assumed the new highway bill would be 20% higher than existing levels, but we now believe the funding will remain at current levels,” Edward Sullivan, PCA chief economist said. “Lack of highway funding and reduced consumer, business and bank confidence due to the debt crisis will all slow down construction recovery.”

According to Sullivan, economic recovery from the Great Recession will be led by a strengthening of confidence in these areas. Without a sustained improvement, private-sector fundamentals such as job creation, investment and ease in lending standards will not be released in full force and commit the economy to a path of improvement.