Ed Sullivan`s Economic Outlook Presentation

PCA Outlook: 2015-2019
Ed Sullivan
Chief Economist, Group VP
PCA
1
Overview
Putting Things Into Context: Economic Outlook
• Job creation exceeds 3.0 million net new jobs 2015-2017.
– Stronger household formation
• Strong job growth in context of sub-6% unemployment suggests
pressure on wages.
• Consumer confidence/sentiment has improved significantly and will
continue.
• Low oil prices add 20-30 basis points to economic growth.
– Regional disruptions among energy producing states.
Putting Things Into Context: Economic Outlook
• Inflation remains low, interest rates expected to only gradually increase,
slower increases in home prices and stronger increases in rents.
– New home affordability remains favorable in absolute terms and against rents.
• Lending risks subside and lending standards ease.
• Economic recovery moving into higher growth phase in the years ahead.
– In excess of 3% growth on a sustained basis.
– Healing of excesses, and huge pent-up demand.
Portland Cement Consumption
Thousand Metric Tons
140,000
2014 = 8.2%
2015 = 8.0%
120,000
100,000
80,000
60,000
40,000
20,000
0
1998
2000
2002
2004
2006
Current Forecast
2008
2010
2012
2014
2016
2018
Spring Forecast
Composition of Changes in Cement Consumption
Share of Total Growth
2014:
+6.5 MMT
Public
23%
2015:
+6.9 MMT
Res
13%
Non
Res
64%
Public
15%
Non
Res
29%
Res
56%
Composition of Changes in Cement Consumption
Annual Percent Change, Real Put-In-Place Construction & Cement Intensity
15.0%
10.0%
5.0%
0.0%
-5.0%
-10.0%
Intensity
-15.0%
Construction
-20.0%
-25.0%
-30.0%
2007
2009
2011
2013
2015
2017
7
Construction Sector Outlook
Putting Things Into Context: Housing Outlook
Housing Starts
Days supply is low and starts
activity is targeted to roughly 5
monthly supply throughout the
forecast.
2,500
•
New home prices rise at rates
above inflation rate.
1,500
•
Constraint to construction such a labor shortages &
property availability - are
assumed to be temporary and
fixed by the market.
1,000
500
2019
2017
2015
2013
2011
2009
2007
0
2005
Starts mix remains trending
toward multifamily.
2,000
2003
•
Thousands of Units
2001
•
Update: Job Creation Relationship to Changes in
Cement Consumption
Past 12 Months, Thousand Net New Jobs, Thousand Tons
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
c
c
Net Job Creation
Change in
Cement
Consumption
10
State Deficit Outlook
Net Balance (Revenues Less Expenditures)
$000
150,000,000
100,000,000
50,000,000
0
-50,000,000
-100,000,000
-150,000,000
-200,000,000
-250,000,000
-300,000,000
2007
2009
2011
2013
2015
2017
2019
Portland Cement Consumption
Thousand Metric Tons
140,000
2014 = 8.2%
2015 = 8.0%
120,000
100,000
80,000
60,000
40,000
20,000
0
1998
2000
2002
2004
2006
Current Forecast
2008
2010
2012
2014
2016
2018
Spring Forecast
Oil Price Adjustments
West Texas Intermediate
Oil Prices Per Barrel
120
$107.40
$99.57
100
$94.12
$97.00
$93.10
$86.60
$79.40
80
$76.20
$66.02
60
$55.00
40
20
0
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
Energy Industry Wages as Share to Total State Wages
WA
NH
MT
ME
VT
ND
OR
MN
ID
SD
MA
NY
WI
RI
WY
MI
CT
IA
PA
NE
NV
UT
IL
DE
CO
MD
WV
CA
NJ
OH
IN
VA
KS
MO
KY
NC
TN
AZ
OK
NM
AR
SC
MS
AL
GA
LA
TX
FL
9%+
8% to 5%
4-1%
No Impact
Asphalt Prices & West Texas Intermediate Prices
$ Per Barrel, Asphalt PPI
1.5% Increase
New Record
High For
Asphalt
270
220
170
120
70
Jan-14
Jul-13
Jan-13
Jul-12
Jan-12
Jul-11
Jan-11
Jul-10
Jan-10
Jul-09
Jan-09
Jul-08
Jan-08
Jul-07
Jan-07
Jul-06
Jan-06
Jul-14
44% Decrease
In WTI
20
Summary
PCA Outlook: 2015-2019
Ed Sullivan
Chief Economist, Group VP
PCA
18
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