Today, I ran into an excellent breakdown of the U.S. economy, done by the Portland Cement Association’s Chief Economist, Ed Sullivan. It’s a mixture of a podcast and powerpoint presentation (you can listen HERE) that lays out the nuts and bolts of the U.S. economy very well. If you want to learn some economic logic, I suggest listening to it at least once before you get your head around it. While the presentation has a cement theme, it does give an excellent rundown of how construction plays into the U.S. economy.
He argues that the constant harping about the housing slowdown’s impact on the economy is somewhat overrated, as construction is simply going to move into commercial and public works projects in coming years. His reasons are twofold.
1. Job growth in business and professional services will drive demand for commerical real estate.
2. The recent trend of US State budget surpluses, federal highway initiatives and a Democratic Congress eager to spend tax dollars on something other than missiles will create demand for public works construction.
It’s a pretty good rundown, even if his forecast assumptions are a little off concerning inflation. Not that I’m an authority, but I would expect a housing slowdown and declining energy prices to alleviate inflationary fears. If oil edges back up in coming months, I guess Sullivan will be proven right.
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