Industry Economists Sound Off on Government Shutdown

As the government shutdown enters its second month, the question becomes, what impact will a long-term shutdown have on the construction and aggregates industries? Rock Products reached out to industry economists and analysts for an answer.

“We have seen some initial impacts of the shutdown on construction,” said Brian Turmail, vice president, public affairs and strategic initiatives for the Associated General Contractors of America. “For example, two states, Oklahoma and New Mexico, have put new bid lettings on hold pending resolution of the government shutdown, and we expect more will follow suit. And some of our contractors working on restricted-access federal projects report they are having a hard time finding enough federal personnel to escort their teams onto job sites. That being said, the impacts are not broader because federal construction projects already underway are all funded. The longer the shutdown lasts, however, the bigger the impact it will have on the construction market.”

At World of Concrete in Las Vegas, Ed Sullivan, executive vice president and chief economist for the Portland Cement Association (PCA), noted that the state of the economy is currently good. He is predicting construction spending increases of 2.2 percent, 1.5 percent, 0.9 percent, 1.1 percent and 1.3 percent from 2019 to 2023. But he told Rock Products economic growth is at risk.

“The federal government shutdown is expected to take 10 to 20 basis points off economic growth in the first quarter if it lasts the entire quarter,” Sullivan said. “Keep in mind, the federal government’s support of economic activity occurs through many mechanisms and that implies that PCA’s rough estimate may not be capturing all the avenues in which the shutdown impacts economic activity. For example, the SBA supports some construction and new business activity. This loan support could hinder loans that are granted, and delay new business growth and construction activity. The longer the shutdown, the greater the adverse impact on economic growth and construction activity.”

Robert A. Murray, chief economist for Dodge Data & Analytics, told Rock Products a lot is up in the air. “With regard to the shutdown I think a lot is still to be determined,” he said. “There has been some modest negative impact on some of the public works areas, however the Federal Aid Highway Program is funded by user fees, so there has not been not much of a negative impact yet. However the uncertainly a prolonged government shutdown would cause could negatively impact a wide range of categories, and that would begin to show up if the shutdown continues into February.”

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