NSSGA commissions Pit & Quarry contributor for market forecast

By |  January 22, 2016

S-C Market Analytics, a construction materials forecasting company whose chief economist contributes regularly to Pit & Quarry, produced a report commissioned by the National Stone, Sand and Gravel Association (NSSGA) about the anticipated impact of the FAST Act on aggregates demand.

In the report, S-C Market Analytics shows a corresponding increase in the demand for aggregates with increased federal dollars in the first few years of the new bill. The FAST Act’s impact peaks in 2018, and then projected higher interest rates and inflation reduce the impact of the federal program.

The FAST Act, which Congress adopted and the president approved in December 2015, injects $305 billion into the federal transportation budget from fiscal year 2016 through 2020. It is the first long-term investment in infrastructure in more than a decade, and the funds provided will allow states to purchase and use an additional 114 million metric tons of aggregates.

“The FAST Act’s five years of funding certainty creates the much-needed stability to enable state governments to plan and implement larger projects again,” says Mike Johnson, NSSGA president and CEO. “The new highway bill, coupled with an increased demand for all types of construction, will require more raw materials, such as stone, sand and gravel. This is a good sign for the aggregates industry and for America.”

David Chereb, S-C Market Analytics’ executive vice president and chief economist, also breaks down the forecast for individual regions and states.

“The Southeast, West, Mountain and some Northeastern regions of the U.S. fare the best under the FAST Act, whereas other states, especially those impacted by the fracking boom, face a pronounced correction,” Chereb says.

S-C Market Analytics predicts an economic decline starting in 2017 as higher interest rates, slowing China and Europe markets and low energy prices put a significant dent in aggregates demand.

“If the economists are right and a slowdown is on the way for 2017 and 2018, the funding certainty of the FAST Act will prove even more meaningful,” Johnson says. “I would hate for the federal highway program to be lurching from short-term extension to short-term extension again during a broad economic downturn.”

Johnson adds that the battle over highway funding is not over because Congress failed to include a permanent and growing revenue solution.

“The nation’s infrastructure needs are far greater than the funding provided by the FAST Act,” Johnson says. “Unless we push Congress to address this shortfall, we will face the same funding cliff that we have had to deal with for the past decade as the program expires in 2020.”

NSSGA members can view the report in its entirety here.

Kevin Yanik

About the Author:

Kevin Yanik is editor-in-chief of Pit & Quarry. He can be reached at 216-706-3724 or kyanik@northcoastmedia.net.

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