Bill’s Blog: Future Looks Gloomy for Construction


No economist in the concrete industry is as respected and accurate with his predictions as Ed Sullivan, chief economist for the Portland Cement Association. Over the past 20 years he has told us when the economy was going up and when it was going down. I’ve heard some gloomy forecasts from him before, like in 2009 and 2010, but nothing quite as disheartening as this. The only potential for optimism in construction is another federal stimulus focused on infrastructure.

On April 9, Sullivan provided a new web-based presentation describing the impact of the coronavirus on the construction economy. His most immediate concern is the labor market. “Make no mistake, we are in a very deep recession,” he says. And this is not going to go away soon just because the stay-at-home orders are lifted, “PCA is now expecting unemployment to reach 26% at the depth of the layoffs.”  

Based on a survey of cement company CEOs, cement sales are already down as much as 30% nationally, although that varies widely by region with the Midwest and mountain states doing better. Between March and the end of June, Sullivan predicts U.S. cement consumption will decline 31%. This has always been a good indicator of what to expect in overall construction activity, so the next few months are going to be challenging.

Unfortunately, the stimulus packages coming from the U.S. federal government will have little direct impact on construction. The speed and magnitude of this crisis is overwhelming and can ‘t easily be helped by federal injections. “Even if small businesses survive, their ability to recover, rehire, and respond may be scarred,” Sullivan explained.

To listen to Sullivan’s full webcast, click here

Other groups have echoed PCA. Associated Builders and Contractors (ABC) surveyed its members at the end of March and found ”confidence among U.S. construction industry leaders plummeted in response to the economic fallout associated with COVID-19” according to ABC’s Construction Confidence Index (CCI). The CCI readings for sales, profit margins, and staffing levels fell below 50 for the first time in the history of the series, signaling expected contraction along all three dimensions. “In the course of a month, construction industry confidence has shifted from ecstatic to utterly dismayed,” said ABC chief economist Anirban Basu. “If anything, confidence is likely to decline further as construction industry leaders come to terms with the full extent of the COVID-19 crisis.”