Pit & Quarry, November 2018

FISCAL YEAR 2019 CONSTRUCTION FUNDING APPROVED BY CONGRESS C AGGREGATE FORECAST By David Chereb A new refreshing path forward for us all T he economy continues to grow at stellar rates with corporations energized and more people re entering the labor force GDP growth rates over 3 percent seemed unattainable a few years ago but now seem normal The new normal is almost the same as the old normal of a few decades ago Alas things are different than a few decades ago so the 10 year path forward is also different There is tension among hiring more qualified workers buying more robots and outsourcing more of the supply line Among these more outsourcing is less likely to happen due to policy changes regulation changes and a revived spirit in U S manufacturing The trade off between more workers or more robots is complicated because the path is better described as more of both Farmers driving tractors machinists running CAD CAM and software engineers using VB NET development platforms all increased worker productivity displaced workers and created new industries The real issue is how quickly the new technologies are introduced and how quickly workers can learn them Going forward the largest gain in aggregate demand by far will be Texas due to new energy activity and a rapidly growing business sector The Rust Belt will do very well with the recent surge in manufacturing and the new trade agreements being a big boost for these states Rhode Island and New England in general Dr David Chereb has many years of experience forecasting construction materials and his webbased forecasting models have captured every major turning point in materials demand for more than 15 years Chereb received his Ph D in economics from the University of Southern California He can be reached at david chereb@ sc marketanalytics com do not grow much due to high taxes and living costs North Dakota and Wyoming do not grow because of our belief that energy prices will decline after 2020 Aggregate growth continues at a solid pace with nonbuilding leading the way Residential begins to struggle as high prices and higher mortgages restrain demand Nonresidential grows slowly as higher employment and retail development move in opposite directions Aggregate prices will outpace volume gains as environmental concerns constrain new supply ongress passed a fiscal year FY 2019 appropriations bill which was expected to be signed into law by President Trump providing significant funding for military construction projects through the U S Army Corps of Engineers USACE and Naval Facilities Engineering Command hospital medical clinic and cemetery projects through the Department of Veteran Affairs VA and harbor maintenance lock dam levee and environmental restoration projects through the USACE Civil Works Program According to the Associated General Contractors of America the bill provides 103 billion for military construction projects an increase of 241 million or 24 percent from the enacted FY 2018 level The bill appropriates 16 billion to fund construction operation and maintenance of military family housing for fiscal year 2019 Construction within the VA is funded at 18 billion In addition 2 billion is provided for infrastructure repair with the funding allocated to both major and minor construction and non recurring maintenance Within the infrastructure total funding 750 million is targeted for corrections at VA facilities across the nation The total USACE Civil Works Program is funded at 7 billion representing an 11 percent increase from last year and the largest amount Congress has ever appropriated to the agency The construction account receives 218 billion and the operations and maintenance account received a record 374 billion including 155 billion in funding from the Harbor Maintenance Trust Fund and full use of estimated annual revenues of 3265 million from the Inland Waterways Trust Fund UPDATE DCG Inc U S Aggregate Demand billions of metric tons 2014 2015 2016 2017 2018est 2019est 2020est RESIDENTIAL 048 052 057 057 058 054 055 NON RESIDENTIAL 065 069 072 070 072 070 073 NON BUILDING 106 105 103 100 108 117 126 TOTAL 219 226 232 227 238 241 254 Yr Yr Ch 68 32 27 22 48 13 54 48 PIT QUARRY November 2018 pitandquarry com