PCA economist upbeat about first half of 2023

Sullivan

Ed Sullivan, chief economist and senior vice president of market intelligence at the Portland Cement Association (PCA), predicts a stronger U.S. economy to emerge during the first half of this year than was previously expected.

Still, Sullivan believes a slowdown in economic growth will likely arrive this summer.

Sullivan shared his thoughts during an economic presentation at World of Concrete in Las Vegas.

With the economy showing more near-term resilience, Sullivan says the Federal Reserve might be more aggressive with rate hikes. Given the timing lags associated with Fed actions, Sullivan says economic fundamentals will eventually weaken and that recession – characterized by unemployment of 6 percent – is unlikely.

Sullivan also predicts private-sector construction – which was down in 2022 – will take another tumble this year. However, he says strong order books may cushion cement consumption decline until the second half of 2023.

The impact of the Infrastructure Investment & Jobs Act (IIJA) will likely be softer than many expect this year, Sullivan adds. He cites inflation, state construction spending reductions and typical spending patterns associated with allocations from IIJA as principal reasons.

“When looking at the big picture of real construction spending and cement consumption this year, we should expect both volumes to soften throughout the year, with significant declines in the second half of 2023,” Sullivan says. “The downturn is expected to be short-lived as interest rates ease slightly and stronger infrastructure volumes materialize in 2024 and beyond.”