Sullivan Predicts More than 3% GDP Growth by Second Half of 2013

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.

Video: PCA 2013 Construction Economy Outlook

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

From businesses: 

  • 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

PCA Expects Strong Growth in Cement in 2013