Portland Cement Association Chief Economist Ed Sullivan told a World of Concrete audience that he expects a slow first half of 2013 to be followed by a more robust, 3-percent-GDP-growth second half to the coming year.
Factors he says will keep gross domestic product growing at less than 2 percent through June:
- Sequestration debate will hinder consumer confidence and spending
- Tax increases
- Spending cuts
Nevertheless, Sullivan expects employment gains to remain near 150,000 monthly. And with better political clarity, businesses and banks will be re-evaluating investment and lending srategies.
Several factors instill confidence in a return to 3-percent GDP growth in the second half of the year.
On the consumer side:
- Employment gains have been consistent and the underlying fundamentals are improving
- Home prices are rising and will improve consumers' perceived wealth, which may be amplified by stock market gains
- Consumer debt service is at a 18 year low
- Added clarity in public policy allows business to focus on longer-term planning
- Improved global outlook will buoy business
And the buzz around banks:
- Banks are healthy, lending risks are lower and policy clarity could translate into more-aggressive lending
Sullivan says 3 percent or better GDP growth in the second half of 2013 will deliver change:
- Consumer, business and banking confidence will improve enough to stimulate investment as focus shifts away from politics to underlying economic fundamentals
- Delayed business investment due to political uncertainty will begin to be released, adding 0.3 percent to real GDP growth
- Employment gains accelerate to an average of 175,000 to 200,000 monthly