FAST Act Analysis Shows Moderate Gains For Aggregate Demand

Jan 22, 2016, 14:22 ET from National Stone, Sand & Gravel Association

ALEXANDRIA, Va., Jan. 22, 2015 /PRNewswire/ -- In a recent analysis performed by S-C Market Analytics commissioned by the National Stone, Sand & Gravel Association (NSSGA), demand for aggregates shows a projected moderate increase through the years of the recently passed highway bill—the Fixing America's Surface Transportation (FAST) Act.

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The FAST Act, adopted by Congress and approved by the president in December 2015, injects $305 billion into the federal transportation budget from fiscal year 2016 through 2020. It is the first long-term investment in infrastructure in more than a decade. These funds will allow states to purchase and use an additional 114 million metric tons of aggregates, allowing more roads, highways and bridges to be built, improved and maintained.

The analysis shows a corresponding increase in the demand for aggregates with increased federal dollars in the first few years. FAST Act impact peaks in 2018 and then projected higher interest rates and inflation reduce the impact of the federal program.

"The FAST Act's five years of funding certainty creates the much-needed stability to enable state governments to plan and implement larger projects again," said NSSGA President and CEO Michael W. Johnson. "The new highway bill, coupled with an increased demand for all types of construction, will require more raw materials, such as stone, sand and gravel. This is a good sign for the aggregates industry and for America."

SC Market Analytics Executive Vice President and Chief Economist David Chereb, Ph.D., also broke down the forecast for individual regions and states.

"The Southeast, West, Mountain and some Northeastern regions of the U.S. fare the best under the FAST Act, whereas other states, especially those impacted by the fracking boom, face a pronounced correction," Chereb said.

Unfortunately, S-C Market Analytics also predicts an economic decline starting in 2017 as higher interest rates, slowing China and Europe markets and low energy prices, put a significant dent in demand for aggregates.

"If the economists are right and a slowdown is on the way for 2017 and 2018, the funding certainty of the FAST Act will prove even more meaningful," Johnson said. "I would hate for the federal highway program to be lurching from short-term extension to short-term extension again during a broad economic downturn."

He added that the fight over highway funding is not over because Congress failed to include a permanent and growing revenue solution.

"The nation's infrastructure needs are far greater than the funding provided by the FAST Act. Unless we push Congress to address this shortfall, we will face the same funding cliff that we have had to deal with for the past decade as the program expires in 2020," Johnson said.

View the report in its entirety, a state-by-state breakdown, the impact on various construction sectors and a full analysis of the FAST Act at http://bit.ly/FASTActNSSGA.

SOURCE National Stone, Sand & Gravel Association



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