CONEXPO-CON/AGG VIP SHOW GUIDE contains Floor Plans and a complete listing of companies exhibiting at the ConExpo-Con/Agg 2014 trade show in Las Vegas March 3-7, 2014. It also contains 2014 forecasts for the Aggregate, Concrete and Cement industries

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CONCRETE & CEMENT MARKET REPORT "We see 2014 as another year of measured expansion," says McGraw-Hill Construction Vice President of Economic Affairs Rob- ert Murray. "Against the backdrop of elevated uncertainty and federal spending cutbacks, the construction industry should still benefit from several positive factors going into 2014. Job growth, while sluggish, is still taking place. Interest rates remain very low by historical standards, and in the near term, the Federal Reserve is likely to take the necessary steps to keep them low. The bank lending environment is showing improvement in terms of both lending standards and volume of loans. And, the improving fiscal posture of states and localities will help to offset some of the neg- ative impact from decreased federal funding." Assessments Based on Assumptions PCA's Sullivan reminds readers in his report that forecasts are assessments based on assumptions, historical trends and correla- tions, and that the association's Market Intelligence Group has always assumed that Congress eventually acts rationally given what is at stake for the economy. "This assumption implies that politicians eventually reach compromise and thereby minimize the near-term disruptive economic aspects associated with bud- getary matters," he says. "With some frustration, our assump- tions regarding the political arena have proven faulty—time and again. "The [last] shut-down of the government offers only the most recent evidence. Each time the political circus on Capitol Hill addresses extensions of the debt limit, budget approvals or the fiscal cliff, it harms the burgeoning economic momentum— adversely impacting the implied economic recovery path of the economy. PCA's assumption that Congress acts rationally, without impacting harm on the economy, has been a faulty assumption," Sullivan concludes. PCA now expects Congress' irrational behavior will continue and has incorporated this as a structural reality in forecasting near-term economic growth, thereby assuming congressio- nal actions will have a short-lived, adverse action on econom- ic growth. The association assumes the debt limit compromise crisis, and the resulting disruption to economic momentum, will become an annual event. PCA estimated that the fall 2013 political impasse resulting in the government shut down cut fourth-quarter GDP 0.2 to 0.3 percent. In addition, the stride of growth was disrupted. Through 2016, PCA assumes a 0.4 percent reduction in GDP growth attributed to Congress' high-wire politics and its adverse impact on the economy in 2014 and an incrementally smaller reduction in 2015; no reduction is made in election-year 2016, when Con- gress is expected to behave. A significant strengthening of real GDP growth, approaching 3 percent in economic growth, is expected to materialize soon. This assessment is based on the continued improvement in the underlying fundamentals, an easing in lending standards, stron- ger consumer and investor confidence, and the gradual release of huge amounts of pent-up demand. PCA expects a gradual recovery in economic sentiment will materialize through the end of 2013. After that, attention will flow back to Washington, and sentiment gains are likely to be briefly derailed, with economic growth becoming somewhat sub- dued. Beyond the first quarter, sustained gains in sentiment are expected to materialize—setting the stage for stronger 2014 eco- nomic growth. Residential Upswing Nearly half of the anticipated growth in 2014 cement consumption is expected to be attribut- able to gains in residential construction, accord- ing to PCA. Homebuilders are unlikely to sig- nificantly accelerate construction activity until two critical conditions are met: 1) low levels in inventory of unsold new homes reflecting no higher than five months' supply; and 2) stable or rising home prices. Both conditions are likely to be required to insure an adequate ROI for home- builders to spur an increase in building activity. PCA believes both conditions are in place, but if either condition is lacking, a substantive recovery in home building will not materialize. Home inventories are lean and home prices are rising, sending a clear signal to homebuilders to accelerate building activity. This assessment is further amplified in the context of stronger 2014 economic growth, job creation and consum- 32 • March 2014 VIP Show Guide U854.indd 32 2/14/14 12:10 PM

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