The American economy will probably scrape the bottom of the trough through 2012 before a substantial recovery finally sets in, said Ed Sullivan, chief economist of the Portland Cement Association, in his latest economic forecast.
Sullivan bucked the trend of economic optimism at ConExpo-Con/Agg, which was held in Las Vegas on March 22-26. Many of the equipment manufacturers at the show said their sales were picking up and predicted a general economic recovery in 2011. Maybe the manufacturers were simply seeing the release of some of the pent-up demand that has accumulated since the Great Recession hit.
Sullivan asked skeptically, “What is going to provide the impetus?”
He said the impetus for a recovery would not come from the residential construction sector, which still faces serious impediments, including an inventory of foreclosed properties, with more possibly to come.
The push will not come from the nonresidential construction sector, which faces its own serious impediments, including a wealth of vacancies, depressed asset prices and difficulty getting credit.
No stimulus will come from state governments either, in Sullivan’s view. The states are dealing with serious budget deficits that must be filled, so they will have little or no spare cash to invest in stimulating their economies.
The federal government will probably fiddle along with short-term extensions of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU), which expired on Sept. 30, 2009, until 2013. Even then, according to Sullivan, Congress will pass a bill only 20% bigger than SAFETEA-LU, an increase just big enough to counter inflation and bring highway expenditures back to SAFETEA-LU levels at the end of the future bill.
In cement production, Sullivan foresees the possibility that more than a dozen plants will be forced to shut down by the Environmental Protection Agency’s National Emission Standards for Hazardous Air Pollutants (NESHAP) during 2013. Complying with NESHAP could raise the cost of cement by 15%, with some companies choosing to import cement from foreign sources rather than make the necessary, expensive plant modifications.
In all, Sullivan said we are only beginning to heal the very deep wound of the recent recession.
