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WHEN WILL IT END?

We are still suffering through the worst economic downturn since the Great Depression. While there is some good news trickling in there is also plenty of bad news to go around. A small increase in housing starts sound great until you realize that the small increase is on a figure that already off well over 50% over the past two years. The residential market seems to have bottomed out but the non-residential sector is looking at its worst year in 2010 and another slightly down year in 2011 (according to economic forecasters).

Just who are these forecasters of doom and what exactly are they saying? I tend to shy away from the politically motivated economists. The left-wing forecasters say that the recovery is just around the corner (what corner are they talking about). The right wing forecasters say we are doomed and we should all move to our mountain shacks. The answer, as always, lays somewhere in between. I have found the information we receive from Ed Sullivan (No, this is not the Ed Sullivan of old with a really, really big forecast), the PCA Economist, to be down-to-earth and practical with no false optimism. He has no political agenda – he’s simply trying to provide his best analysis so that people involved in the cement industry can make informed decisions. I listened to his forecast a couple of years and he said unemployment would top out at over 10%. He was too close.

So what are Ed and his fellow economists saying about 2010 and beyond. First, the good news: The residential market. The total residential market in the U.S (single family, multi-family, and improvements) was down 25.1% and 29.1% respectively in 2008 and 2009. Within that figure, the single-family new construction market (the one most of you are involved with) was down 36.8% and 44.5% respectively for the period. Ed and his compatriots forecast a 9.5% total residential market increase in 2010 (28.2% in new single family construction) followed by a 43.1% increase (84.4% increase in new single family construction) in 2011 and continued double digit expansion through 2013. Perhaps a recovery for the residential market is, just around the corner.

The bad news: Everything non-residential except Public Buildings. The non-residential building market is projected to be off by 22.4% in 2010 following a 18.5% decline this year. Virtually every sector aside from public buildings, highways & streets, military construction, and conservation is projected to decline led by the industrial, office, and lodging sectors. 2011 is projected to be off by another 3.3% with recovery delayed until 2012.

Economic are forecasts based on a assessments from a multitude of facts and figures. It’s a lot like weather forecasting. Two different weathermen can come up with different forecasts from exactly the same sets of data. The predictions are not rock (make that concrete) solid but they are the best assessment of trained individuals without political overtones. Unforeseen things can happen that could critically alter these predictions (i.e. a serious terrorist attack) but by and large, this paints a picture of better times to come in the near future for the residential markets and beginning in 2012 for the non-residential markets.

If you would like a pdf copy of the PCA Forecast Report, Fall 2009, email me, esauter@cfawalls.org at CFA headquarters and I’ll send it off and will include the next one when I get it. Hang in there, better times are just around the corner, right next to your mountain shack.

Ed Sauter, Executive Director, CFA
esauter@cfawalls.org

 

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Concrete FACTS, a publication of the Concrete Foundations Association, is THE voice for residential concrete industry news, market intelligence, business strategies, technical solutions, product information, and other resources for professionals in the cast-in-place concrete industry. Subscriptions to Concrete FACTS is available to anyone involved or interested in the residential concrete industry as a service to your industry. Please contact CFA Headquarters to find out more about your free subscription or Email Us