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Market Update New labor and inflation data show economic cooling, raising the likelihood of faster Fed easing and lower 2026 long-term interest rates. Economic Overview Due to a 43-day federal government shutdown, data on the economy's performance was delayed. Recent government data releases now cover October and November. The latest U.S. inflation and labor market data indicate a slowing economy. Labor Market Insights Recent data from the Bureau of Labor Statistics (BLS) show continued softening in the labor market. In October, there was a loss of 105,000 jobs. This was followed by a modest gain of 64,000 jobs in November. The unemployment rate has increased to 4.6%, the highest level in seven years. Wages grew by 3.5%, which is significantly below the average recorded in 2024 and the first half of 2025. This slowdown reflects reductions in federal government employment, heightened uncertainty, and a weakening economy. Inflation Trends Inflation has improved significantly. The Consumer Price Index (CPI) for October and November showed inflation rising by 2.7% over the past year. Core inflation, which excludes volatile food and energy costs, was recorded at 2.6% annualized. Notably, there is no clear evidence of tariff-induced inflation. Implications for the Construction Industry These reports collectively reflect a slowing economy. Weaker job markets and slowing wage gains lead to less demand for goods and services. This, in turn, forces prices to moderate. If these conditions persist, the pace of future Federal Reserve rate cuts could accelerate. The combination of more aggressive monetary policy easing and lower inflation suggests declines in long-term rates. Long-term rates are crucial as they drive mortgage and commercial loan rates. If these trends continue, private construction could perform better than expected in 2026. Future Outlook As we look ahead, it is essential to consider how these economic indicators will affect the construction sector. The interplay between labor market conditions and inflation will be critical. Navigating Market Uncertainties For construction professionals, understanding these dynamics is vital. The potential for lower long-term interest rates could create opportunities for new projects. However, it is essential to remain cautious. The economic landscape is still uncertain. Strategic Planning In this environment, strategic planning becomes even more critical. Professionals in the construction and cement industries must stay informed about economic forecasts. This knowledge will enable them to make informed decisions. Conclusion In summary, the current economic data suggests a slowing economy with potential implications for the construction sector. By staying informed and adapting to changing conditions, professionals can navigate these uncertainties effectively. About The Sullivan Report The Sullivan Report delivers subscription-based economic forecasts, news, and market updates tailored to the cement, concrete, construction, and building materials industries. Its flagship publication, the Cement & Construction Outlook, is released three times a year - and features 5-year forecast projections, expert analysis, and actionable insights to support informed decision-making and long-term strategic planning amid an evolving economic landscape Guided by award-winning economist Ed Sullivan, The Sullivan Report also offers keynote presentations and customized forecasting services for organizations and regions seeking deeper, data-driven market intelligence. For more information, message us here, visit *TheSullivanReport.com, or email us at info@thesullivanreport.com.

Market Update: Breaking News Heavy Infrastructure Construction Introduction The Infrastructure Investment and Jobs Act of 2021 (IIJA) is scheduled for replacement in mid-2026. IIJA was a five-year, $1.2 trillion dollar program, of which $550 billion was new spending that supported highways, bridges, water systems, ports, transit, and grid projects. By this program supporting spending in concrete-intensive sectors, it was a core component for public construction activity, which accounts for more than 30% of total cement consumption. When IIJA was initially passed, considerable optimism surrounded the program. Indeed, during congressional hearings I testified on the importance of the bill, as well as the ability of the industry to provide necessary product. Congressional concern over cement capacity constraints indicates the optimism that surrounded the new program. There is little doubt the program was ambitious, but its strength in delivering the anticipated volume of cement and concrete demand eroded under the weight of inflation. The replacement of IIJA plays a critical role regarding the volume outlook for concrete related industries post 2026. The new multiyear program will impact concrete demand, utilization rates, pricing power, and the stability of shipments across nearly every major regional market. The level of investment in infrastructure going forward will also impact economic growth, structural inflation, our competitiveness as a nation, the quality of life and job creation. The Economic & Political Context Shaping the Next IIJA The next Infrastructure Investment and Jobs Act will be crafted in a fundamentally different macroeconomic and political environment than the 2021 legislation. The original IIJA was enacted during a period of near-zero interest rates, elevated deficit tolerance, and broad political urgency to support post-pandemic economic recovery. That environment has since shifted. Higher interest rates have raised the cost of federal borrowing, while rapidly rising debt service has made large, deficit-funded spending programs far more difficult to justify politically. Inflation sensitivity has also increased voter resistance to large federal outlays that could be perceived as simultaneously adding to the federal debt and overall price pressures. In addition, long-standing structural issues in infrastructure finance have become more visible. The Highway Trust Fund remains under severe strain as fuel tax receipts fail to keep pace with spending needs and electric vehicle adoption accelerates. This has weakened confidence in long-term highway funding formulas without permanent general-fund support. Politically, polarization has deepened and the bipartisan coalition that enabled passage of the 2021 IIJA has narrowed. Today, persistent political division in Congress makes reaching consensus on an IIJA replacement difficult. While both parties’ support infrastructure in principle, disagreement over spending levels, climate provisions, and deficit impacts sharply limits the likelihood of a broad, bipartisan bill. Against this backdrop, the next IIJA is likely to emerge as a narrower, more targeted package. Rather than a broad national uplift across all infrastructure categories, it will likely reflect tighter fiscal discipline, heightened national security concerns, and intensified competition for federal capital between transportation, energy, defense, and industrial policy priorities. Range of Policy Outcomes for the Next IIJA There are a multitude of policy outcomes regarding the replacement of IIJA. Considering the economic and political forces, the next Infrastructure Investment and Jobs Act is likely to emerge under one of four broad legislative outcomes. These scenarios include: Full Robust Replacement Mid-Scale Industrial Focus Patchwork Reauthorization Fiscal Retrenchment These scenarios reflect varying degrees of fiscal capacity, political alignment, and national urgency. Full-Scale Replacement: This is the high-end solution and resembles the original IIJA in both size and breadth - delivering a broad national uplift across highways, bridges, water, transit, ports, energy, and grid systems. Given the broadscale spending and considering heavy construction inflation, this version of IIJA replacement would cost as high as $2.0 trillion over five years. Mid-Scale Industrial Framework: This solution is much less comprehensive than the Full Scale Replacement scenario. It focuses investment on freight corridors, ports, grid reliability, energy systems, and defense-adjacent infrastructure. It also reflects tighter deficit tolerance but sustained bipartisan support for industrial resilience and supply-chain security. This version of IIJA replacement cuts out many environmental and nonessential spending efforts. By reducing or eliminating spending on lesser important programs, and compensating for inflation erosion, this version would cost as much as $1.2 trillion. Patchwork Reauthorization: This solution is where Congress relies on short-term extensions and selective program funding rather than a comprehensive long-duration bill. This requires congress to act multiple times over the five-year period. For state DOTs, contractors, and cement and concrete producers, patchwork reauthorization is the worst-case scenario for planning certainty, even though it is not the lowest-spending scenario in real terms. This version of IIJA replacement would cost as much as $500 billion. Fiscal Retrenchment: This solution is the least likely scenario and reflects aggressive deficit control that leads to real declines in federal infrastructure spending after the current IIJA outlays taper. Only the highest priority projects are funded. This leads to insufficient investment and pushes more maintenance and expansion onto the state governments. This version of IIJA replacement would cost as much as $400 billion. Compared to the Patchwork reauthorization, it provides less dollars but adds more certainty to planning. The Likely Policy Outcome and Why The most likely outcome for the IIJA replacement reflects key assessments regarding fiscal reality, political structure, and historical precedent. Our recent Fall/Winter 2025 Cement Forecast assumes the Mid-Scale Industrial Framework. We believe it is the most likely because it aligns closest to today’s governing constraints. Federal deficit tolerance has fallen sharply since 2021 as interest rates and debt service costs have risen. At the same time, bipartisan support has consolidated around supply-chain security, energy reliability, grid hardening, ports, and defense-adjacent infrastructure. These priorities can justify substantial capital spending without reopening the divisive climate, transit, and social-infrastructure debates that dominated the last IIJA. The 2026 midterm elections significantly increase the likelihood of a Patchwork Reauthorization outcome. Election-year paralysis, uncertain future majorities, and heightened fiscal politics make repeated short-term extensions far more probable than a full five-year surface transportation bill. This outcome significantly reduces spending during the five-year period, disrupts planning, and shifts a considerable amount of the financial burden to the states. In addition, this version may place more expose the frailties of the Highway Trust Fund since every extension of a highway spending will probably require Congress to patch the trust fund. Because many consider public infrastructure spending as a cost and additive to the federal deficit, rather than an investment yielding economic returns, the Full Robust Replacement scenario is unlikely given growing concerns about the federal debt. Historically, trillion-dollar infrastructure bills only pass in environments defined by recession, crisis, or broad national-security urgency. Absent such a trigger, Congress is unlikely to support another program at IIJA’s original scale in real, inflation-adjusted terms. Finally, fiscal retrenchment remains a risk tied to federal debt levels and the potential of bond market stress or forced austerity. It is unlikely, but its consequences would be severe enough to warrant inclusion as a downside stress case. The Time Lag Between a New Infrastructure Bill and Concrete Consumption Even after a new federal infrastructure bill is enacted, its impact on concrete consumption is not immediate. The translation of legislative funding into actual concrete placement follows a multi-stage process that introduces a predictable delay between authorization and concrete demand. After passage, federal agencies must first issue apportionments, define program rules, and publish grant guidance. States and utilities then advance project design, secure local matching funds, and resolve right-of-way and utility conflicts. The longest delay typically occurs during permitting and environmental review, where projects may spend months or years awaiting clearance before entering active construction. Infrastructure Timing to Pour: Project Type to Timelines For light pavement rehabilitation and resurfacing, concrete demand can begin to appear within six to twelve months of enactment. For structurally intensive projects - bridges, interchanges, water and wastewater facilities, ports, transmission, and energy infrastructure - the first major concrete placements typically occur eighteen to thirty-six months after the bill becomes law. Large megaprojects often extend that timeline further. These timelines may be reduced. The Trump administration could meaningfully accelerate a new IIJA’s impact on concrete demand through executive and regulatory actions alone, pulling forward material consumption. Lacking the administration’s action, the SPEED Act now before the House could accelerate the impact of the next IIJA by pulling the first major wave of concrete demand forward by months. Neither of these programs increase total demand, but they could fundamentally change when that demand hits the system. If meaningful permitting reform accompanies the next infrastructure package, these timelines could compress by as much as one-third, pulling demand forward considerably. However, absent such reform, producers should plan for a delayed but durable demand response. For cement and ready-mix suppliers, this lag is critical to capital planning, import risk management, and pricing strategy. Baseline IIJA Impacts on Cement Consumption Under the most likely Mid-Scale Industrial replacement scenario, which we define as the baseline, the next IIJA would initially contribute to moderate growth in U.S. cement consumption. This scenario focuses on freight corridors, ports, grid reliability, energy systems, and defense-adjacent infrastructure. While the real dollar spending is less, it eliminates many environmental and nonessential spending efforts. The remaining spending programs typically carry high cement and concrete intensities. This means for every dollar spent, more cement is consumed compared to the existing IIJA. IIJA Annual Contribution-to-Demand: Million Metric Tons Compared to No IIJA Replacement No funding scenario outlined thus far includes any form of indexing to construction inflation. In today’s environment, inclusion of indexing could be interpreted as adding to inflation woes that currently embrace the economy. Without indexing, the stimulatory impact of a new IIJA on cement consumption will fade over time. Construction inflation will erode the real value of federal funds, causing fewer concrete-intensive projects to be initiated in the later years of the program. The result is strong early demand and weakening real growth by years four and five. Compared to no replacement of IIJA, the Mid-Scale Industrial scenario adds roughly 3 million metric tons (MMT) of cement consumption annually. The Full Robust Replacement adds roughly (8) MMT annually. The Patchwork Reauthorization adds (1) MMT annually, and the Fiscal Retrenchment reduces cement consumption by as much as (3 ) MMT annually. Combined, these scenarios define the full, policy-driven risk and opportunity range facing U.S. cement producers over the next several years. About The Sullivan Report The Sullivan Report delivers subscription-based economic forecasts, news, and market updates tailored to the cement, concrete, construction, and building materials industries. Its flagship publication, the Cement & Construction Outlook, is released three times a year - and features 5-year forecast projections, expert analysis, and actionable insights to support informed decision-making and long-term strategic planning amid an evolving economic landscape. Guided by award-winning economist Ed Sullivan, The Sullivan Report also offers keynote presentations and customized forecasting services for organizations and regions seeking deeper, data-driven market intelligence. For more information, message us here, visit TheSullivanReport.com, or email us at info@thesullivanreport.com.

Economic Forecast Introduction All forecasts contain risk. Risks can originate from the data used, the process of calculations, the assumptions, or a combination of each element. Indeed, an infinite number of alternative scenarios to the Baseline exist. Each materializes with even small changes in assumptions. The risks surrounding The Sullivan Report’s Fall/Winter 2025 Forecast remain high. They center on assessments regarding underlying strength of the economy and the headwinds that face the near-term economy. Key assessments include: 1. The impact of administration policies on the economic fundamentals. 2. Federal Reserve monetary policy actions. 3. The strength and resiliency of consumer spending. Other risks ranging from global military conflicts to extraordinary weather events are not captured in either our Baseline or Alternative Scenarios. Data risks are also particularly important in this report. With the federal government shutdown, reporting delays in data have materialized. The latest U.S. Geological Survey (USGS) cement consumption report was June 2025. That is a considerable data lag and creates risk. Finally, my regular talks with people in the field suggest a theme of recent strengthening in order books and activity. If this is accurate on a broad scale, it may suggest upside risk to the economy. Monetary policy and forecast risks are projected to heighten in 2027. Our Baseline Forecast assumes more aggressive easing in monetary policy will unfold beginning in the second half of 2026, based on President Trump choosing a chair more aligned with his policy preferences. It raises the potential for monetary policy to tilt toward short-term, political objectives rather than long-term, price-stability goals. If aggressive rate reductions unfold in the context of improving inflation, a strong, residential-led construction rebound is likely to take hold in 2027 - and thereafter (reflected in our Optimistic Scenario below). If instead, the cuts occur amid rising inflation, they risk fueling further price acceleration and could force the Fed into a renewed tightening cycle in 2027 (reflected in our Pessimistic Scenario below). Significant macroeconomic risk also lies in the outyears of the forecast. Eventually, artificial intelligence (AI) could disrupt hiring practices. While some suggest AI could lead to a significant increase in unemployment, most experts suggest that possibility is years beyond the 2030 forecast horizon.

Market Update: Breaking News What does the Government's Shutdown Mean to Federal Funding? The 2025 federal government shutdown finally came to a close following passage of a bipartisan funding measure last night, November 12, 2025. The reopening agreement does not resolve issues relating to the Affordable Care Act that caused the shutdown, it merely postpones them. The agreement funds the government through January 30, 2026, setting up another potential spending confrontation early next year. The rule of thumb is each week of shutdown reduces quarterly GDP growth by about 0.1 to 0.2 percentage points. Given the shutdown length (6.1 weeks) that implies a reduction GDP growth between 0.6% to 1.25%. The threatened government reduction in force (RIF) did not fully materialize. That wrinkle held the promise of a more significant adverse economic impact. Much of the economic loss will be recaptured quickly. Federal employees will receive back pay and agency spending resumes – accounting for much of the economic loss. Most of the economic loss is expected to be recaptured during the fourth quarter 2025 and first quarter 2026. Only lost consumption by furloughed workers, cancelled travel, delayed business activity, and halted federal procurement cannot be fully recovered. The overall permanent loss to the economy that will not be recouped is estimated at 0.1% to 0.2% from economic growth. The shutdown disrupted the timing of construction activity, not necessarily the longer-term level of activity. Federal agencies, for example, could not issue new contracts, release grants, or process environmental and engineering reviews. Since states rely heavily on federal reimbursements, some of their bid letting and project timing were also disrupted. These factors could push volumes of certain construction work from 2025 to 2026. From a longer-term perspective, little permanent adverse impact is expected to be felt by the construction industry. About The Sullivan Report The Sullivan Report delivers subscription-based economic forecasts, news, and market updates tailored to the cement, concrete, construction, and building materials industries. Its flagship publication, the Cement Outlook, is released three times a year and features 5-year forecast projections, expert analysis, and actionable insights to support informed decision-making and long-term strategic planning amid an evolving economic landscape. Guided by award-winning economist Ed Sullivan, The Sullivan Report also offers keynote presentations and customized forecasting services for organizations and regions seeking deeper, data-driven market intelligence. For more information, message us here, visit TheSullivanReport.com, or email us at info@thesullivanreport.com.

Market Update What is Happening to the Dollar? The September Consumer Price Index (CPI) came in slightly better than anticipated — at 0.3% month over month and 3.0% year-over-year. While the inflation rate remains above the Federal Reserve target rate of 2.0%, it did not reflect any significant tariff-related inflation that many had expected. If even small progress toward the target rate materializes in subsequent reports, it will likely signal a continued easing in monetary policy. A 25-basis point (BP) cut is expected to be decided at next week’s Fed meeting. Tamer inflation, in the context of a slowing economy, likely suggests further cuts lie ahead. Keep in mind, Trump’s appointment of a new Federal Reserve Chairman in June and monetary policy easing is expected to accelerate in 2026. In this context, near-term Treasury yields  could edge slightly lower with mortgage rates  stabilizing around 6.3 – 6.5%. It would then provide modest relief to borrowers - signaling to potential homebuyers that financial conditions are no longer tightening. Keep in mind, the single-family sector is expected to lead the recovery in construction activity. In the context of gradually easing inflation and interest rates, the timing for the potential recovery of construction is expected to begin by mid-2026. On a separate note, the Federal Government shutdown is now in its fourth week with no end in sight. It will have an impact on fourth-quarter, real GDP growth. According to the Philadelphia Federal Reserve Survey of Professional Forecasters , fourth-quarter growth is expected to average 1.4% growth. That estimate does not include the shutdown. Subtracting out that impact, it leaves fourth-quarter, real GDP growth at 0.9%. While much of this loss will be recaptured later, the longer the shutdown endures, the greater the potential for permanent GDP losses. About The Sullivan Report The Sullivan Report   delivers subscription-based economic forecasts, news, and market updates tailored to the cement, concrete, construction, and aggregates industries. Its flagship publication, the Cement Outlook, is released three times a year and features 5-year forecast projections, expert analysis, and actionable insights to support informed decision-making and long-term strategic planning amid an evolving economic landscape. Guided by award-winning economist Ed Sullivan, The Sullivan Report also offers keynote presentations and customized forecasting services for organizations and regions seeking deeper, data-driven market intelligence. For more information, message us here, visit TheSullivanReport.com ,  or email us at info@thesullivanreport.com .

Market Update Economic Overview After the recent employment report and subsequent revisions, it was widely believed that The Fed would reduce interest rates at the upcoming September meeting. However, new economic data has introduced uncertainty into this expectation. Producer Price Index Insights This week, the Producer Price Index (PPI) showed a 3.3% annualized increase. When excluding soft oil prices, the core PPI rose at a 3.7% annualized rate. These increases surpassed expectations, primarily due to the effects of tariffs on producers. Consumer Price Index Comparison In contrast, the Consumer Price Index (CPI) indicated a more modest annualized increase. Over time, the rises observed at the producer level are likely to be passed on to consumers. This dynamic suggests that inflationary pressures may be building. Retail Sales Performance Today, preliminary retail sales figures demonstrated strength. Together, these reports indicate a stronger-than-anticipated economy, which could lead to higher future inflation. While the situation remains somewhat unclear and additional data is necessary, these findings challenge the prevailing notion that a rate cut is imminent in September. While a cut may still happen, it is no longer a certainty. Implications for the Construction Industry For professionals in the construction and cement industries, these economic indicators are crucial. Understanding the potential for inflation and interest rate changes can inform strategic decisions. It is essential to stay updated on these trends, as they can significantly impact project costs and financing options. Conclusion In summary, the latest economic data presents a complex picture. While the expectation of a rate cut was strong, the recent reports suggest that the economy may be more resilient than previously thought. As we move forward, it is vital to monitor these developments closely. About The Sullivan Report The Sullivan Report delivers subscription-based economic forecasts and market updates tailored to the cement, concrete, construction, and aggregates industries. Its flagship publication, the Cement Outlook , is released three times a year and features 5-year forecast projections, expert analysis, and actionable insights to support informed decision-making and long-term strategic planning amid an evolving economic landscape. Guided by renowned economist Ed Sullivan, The Sullivan Report also offers keynote presentations and customized forecasting services for organizations and regions seeking deeper, data-driven market intelligence. For more information, message us here, visit TheSullivanReport.com , or email us at info@thesullivanreport.com .

Market Update Introduction Oil prices are expected to decline this year and next which will impact inflation, consumer spending, some regional economic performances, drilling activity, and oil-well cement consumption in the United States. Each of these factors impact the near-term outlook for the economy and cement consumption. This article looks at each of these factors and their net impact on construction activity.  Oil Price Outlook: Global Economic Activity The outlook reflects slowing global economic activity, accelerated OPEC and non-OPEC production, and strong shale production in the U.S. Geopolitical risks that disrupt supply from Iran, Russia, Venezuela, or the flow of oil through the Strait of Hormuz pose significant upside risks to these projections. The World Bank recently cut its economic growth forecast. The slower growth outlook reflects high interest rates, weakened export demand, disrupted supply chains, and elevated uncertainty that slows down investment. Indeed, nearly two-thirds of the world’s economies have downgraded their outlook because of these factors. In addition, weakened domestic demand and tariffs have slowed down growth in China. China’s footprint on world economic growth is large. Combined, these factors reduce demand for oil. On the supply side, OPEC plans to boost production to recapture market share, much of which it had lost to U.S. shale producers. OPEC, especially Saudi Arabia, has committed to accelerated production to regain share. OPEC has added production of 1.78 million barrels per day (mbpd) this year. More increases are expected through the third quarter of 2025 with the total production increase to 2.75 mbpd. According to the International Energy Agency , daily supply of oil is estimated at 105.6 mbpd. In comparison, demand is currently at 103.0 mbpd. This imbalance is the reason oil prices have dropped $10 per barrel this year. Given the supply and demand dynamics, the supply imbalance will widen and more downward pressure will materialize on oil prices. This imbalance is expected to remain in place throughout 2025 and all of 2026 – which means further price erosion. Oil prices are expected to decline this year and next according to the United States Energy Information Administration (EIA) . West Texas Intermediate started the year at nearly $76 per barrel. Currently, it stands at slightly more than $66 per barrel. That translates into a 13% decline. The EIA expects the price to weaken further throughout 2025 and 2026 – eventually reaching a low of $56 per barrel. A recent survey of oil economists suggests downside risks to these forecasts. Economic Impacts to Lower Oil Prices Lower oil prices will ease inflation. For every $10 decline in oil prices, it results in roughly a 0.3% decline in consumer inflation.  That reflects the direct effects of lower fuel prices and indirect effects that includes lower production and distribution costs. This implies that some of the increase in inflation that is expected to materialize later this year and in 2026 will be partially offset by lower oil prices. Keep in mind, other secondary effects, such as a weaker dollar, will also be at work and may counter this benefit. By lowering inflation, household purchasing power is enhanced. Perhaps the largest benefit accrued from lower oil prices is lower gasoline prices. For every $1 decline in prices, gasoline at the pump declines as much as 2.5 cents per gallon. Based on EIA estimates, oil prices are expected to decline $11 per barrel in 2025 and nearly the same amount again in 2026. The average gasoline price in the U.S. is currently $3.16 per gallon according to AAA. With the expected declines in oil prices, gasoline prices should decline to $2.82 per gallon by year-end, and roughly $2.50 per gallon by year-end in 2026. Based on one and a half cars per household, that translates into 70 gallons per month for the “typical” household. With 132 million households that translates into roughly savings of $18 billion in 2025 and almost the same for 2026. Roughly 70% of total U.S. economic activity is consumption activity. This adds roughly 20 basis points to U.S. economic growth. From a monetary policy standpoint, falling oil prices give the Federal Reserve more room to ease rates should broader disinflation continue. In addition, if the decline in prices reflects deteriorating global demand, a signal of broader economic weakening ahead, it may prompt the Fed the cut a bit earlier than expected. Oil Cement Economic Impacts - Including Cement Consumption The decline in oil prices also has negative impacts. Drilling activity will ease. And with it, oil-well cement consumption. Oil-well cement consumption accounts for a small share of total cement consumption but plays a more important role in states like Texas, North Dakota, Pennsylvania, and New Mexico. With U.S. rig counts already flattening, further price declines below breakeven levels (typically $55–$65 per barrel for shale producers) could trigger further drilling cutbacks. Reductions in drilling will likely focus on areas other than the Permian Basin or Eagle Ford. According to a Dallas Federal Reserve survey, these producers have the lowest breakeven point (low $50’s/barrel). Elsewhere shale producers’ breakeven point tends to be as much as $10 higher than the lower cost producers. According to the EIA, prices are expected to reach $54 per barrel. Those prices imply marginally profitable production in the Permian Basin and Eagle Ford, and losses elsewhere. Reduced production in the U.S. is exactly Saudi Arabia’s desired result from their increases in oil production. Recognizing their breakeven is $20 or lower, the Saudis can leverage this cost advantage to drive out U.S. producers. They did this in 2014, resulting in $150 billion in debt and the bankruptcy of 35 oil exploration and development companies. In 2014, the economy recorded solid and accelerating growth. This is not the case today. As a result, the Saudis' strategy could result in even stronger adverse consequences for domestic oil producers. Oil well drilling has been declining since 2023. It recorded a significant decline in 2024 (-10%). Year-to-date (July), oil-well, rig count has further declined 12% with further drops expected - leaving the total rig decline at nearly 17% for 2025. By year-end 2026, the EIA expects oil prices will reach $53 per barrel resulting in a projected additional drop of 8%. As the U.S. and world economies regain footing, oil demand is expected to increase and lead to price firming and modest gains in drilling during 2027 through 2030. The decline in oil-well cement demand that began in 2024 is expected to continue through 2026, roughly mirroring the percentage drop in oil prices. That implies that oil-well cement consumption will steal roughly 30-35 basis points off 2025 growth and roughly another 15 to 20 basis points in 2026. The sector is expected to support growth in the out years of the forecast. In summary, all of this analysis weighs heavily on oil prices. Oil prices are highly volatile. Geopolitical factors represent significant upside potential to oil prices. Two key risks stand tall, Middle East instability and sanctions on Russia for its war on the Ukraine, and Iran. Middle East instability includes disruption in the region’s oil production caused by hostilities as well as Houthi attacks in the Red Sea and the Gulf of Aden. Either of these events could trigger a temporary price shock that could alter these baseline estimates. About The Sullivan Report The Sullivan Report   delivers subscription-based economic forecasts and market updates tailored to the cement, concrete, construction, and aggregates industries. Its flagship publication, the Cement Outlook , is released three times a year and features 5-year forecast projections, expert analysis, and actionable insights to support informed decision-making and long-term strategic planning amid an evolving economic landscape. Guided by renowned economist Ed Sullivan, The Sullivan Report also offers keynote presentations and customized forecasting services for organizations and regions seeking deeper, data-driven market intelligence. For more information, message us here, visit TheSullivanReport.com ,  or email us at info@thesullivanreport.com .

Two reports released recently suggest single-family construction may be headed for a larger correction than many expected. Any reading of the NAHB Homebuilder Confidence Index [1] above 50 suggests optimism among homebuilders. Any reading below 50 suggests pessimism. Even though the builder confidence showed a one-point improvement, it now stands at 38 – extremely pessimistic. June’s single-family starts came in at a seasonally adjusted annual rate of 883, 000 units. This reflects a 4.3% Y-O-Y decline. At that rate, new home inventory levels will likely improve slightly but remain at over 8 months supply. High inventories will trigger homebuilder reaction in three ways. They will: Continue to sweeten the deal to potential homebuyers by upgrade home finishes at no extra charge; engage in mortgage-rate buydowns; and provide closing cost assistance. According to a recent survey, 62% of home builders engage in one of these incentives. Cut prices: This, however, is made more difficult in the context of rising costs that have been heightened by tightened immigration and tariffs. According to the homebuilder survey, more than 38% of homebuilders have cut prices. Cut back the pace of new home starts and production. This new data supports the view that single-family construction may be facing a larger decline this year than many expect. Given the sector’s importance in overall cement consumption, it may also indicate a ratcheting down in total market expectations for 2025 and early 2026. [1]   NAHB/Wells Fargo Housing Market Index, July 2025, https://www.nahb.org/news-and-economics/housing-economics/indices/housing-market-index . About The Sullivan Report The Sullivan Report   delivers subscription-based economic forecasts and market updates tailored to the cement, concrete, construction, and aggregates industries. Its flagship publication, the Cement Outlook , is released three times a year and features 5-year forecast projections, expert analysis, and actionable insights to support informed decision-making and long-term strategic planning amid an evolving economic landscape. Guided by renowned economist Ed Sullivan , The Sullivan Report also offers keynote presentations and customized forecasting services for organizations and regions seeking deeper, data-driven market intelligence. For more information, message us here, visit TheSullivanReport.com ,  or email us at   info@thesullivanreport.com .

Market Update: Everything Suggests Bad Economic News is on the Way. Introduction Only weeks ago, harsh tariff talk had some expecting an economic downturn. Since then, a guarded sense of optimism has set in. The tariffs were reduced and postponed – at least for now. Jobs grew at a solid pace in April. Unemployment remained steady. Surprisingly, the rate of inflation improved. Some trading partners showed a willingness to negotiate. Reflecting this spate of good news, consumer sentiment climbed, and the stock market recovered. Economists have backed away from dismal talk. Things were all going to be OK. To top it all off, this optimism will likely be reinforced by data released in the next month or two. And perhaps the recent court ruling against the imposition of some tariffs will add to the optimism. Unfortunately, this may all be the calm before the storm. The prospects of tariffs will disrupt an already fragile economic growth path. Other factors will weigh against near term growth. These factors include a weakened dollar, aggressive illegal immigration control, pauses in funding on government contracts, and looming increases in federal debt. Even if the courts bar the reciprocal tariffs, those on steel, aluminum, automobiles, and lumber are likely to materialize. These impacts could be significant and won’t show up in the marketplace until the tariffs are in full effect. That means we won’t see it in data reports until at least a month after that. The skies won’t really begin to darken until mid-summer.

Market Update Highway Construction's Bump in the Road The U.S. construction, cement and concrete markets are poised for another year of contraction. Even in the wake of recent interest rate cuts by the Federal Reserve , lending rates for commercial and home buyers remain high. With the private-sector subdued, any potential for growth this year will hinge on sectors less sensitive to interest rates.   While onshoring and data center construction have emerged as bright spots within the U.S. cement market, their overall impact remains limited in a 100 million-metric-ton cement industry. The burden of near-term growth now falls on public construction - particularly highways.    Unfortunately, real highway spending has already entered its second consecutive year of decline, with another modest one expected next year.  Coupled with a subdued recovery across residential and nonresidential markets, it suggests another challenging year lies ahead for those in the cement and concrete industries.   This article lays out the reasoning behind this conclusion and what that means for the 2026 outlook. Keep in mind, the conclusions presented here reflect national trends.  Regional trends could be much different depending on unique market conditions and the state level.   Public Construction There is no shortage of demand for public infrastructure. As the population and economy grow, more demands are placed on public infrastructure. Infrastructure is critical in providing the efficient flow of commerce as well as providing public health, safety, and education to our populace. Yet history shows that infrastructure investment often fails to keep pace – leading to infrastructure deterioration, deferred maintenance, and reduced public benefit.   The American Society of Civil Engineers (ASCE)  periodically provides a “Report Card” on the state of the nation’s infrastructure, and it shows there is a clear need for increased investment in our infrastructure.  ASCE estimated it would require $9.1 trillion in real (2022) dollar spending to bring the nation’s infrastructure into a “state of good repair“ by 2033.

Today’s CPI Report Impact on Construction Outlook The Data: The Bureau of Labor Statistics (BLS) Consumer Inflation Report released today (July 2025) showed a modest increase in the inflation rate – the first increase since January. The annualized rate now stands at 2.7%, compared to 2.8% recorded since March. The core rate (excluding food and energy price changes) rose for the second consecutive month. 12-Month Percent Change in CPI for All Urban Consumers June 2024 - June 2025 Data Insight:  The marginal increase will likely prompt Administration officials to suggest the tariff impact on inflation is overstated.  Antagonists to the Administration will suggest that the small uptick in the inflation rate is a sign of more aggressive inflation that lies ahead.  To be fair, the initial tariff impacts will take time for their impact to be realized in data – perhaps not until early fall. Keep in mind, tariff policy is a moving target. New tariffs have been imposed or threaten to be imposed on a regular basis. If enacted, these tariffs threaten even further inflationary threats in subsequent months/quarters.  Policy Impact:  The latest data adds little insight regarding the direction of future inflation. This is likely the way the Federal Reserve will read the new data release. If so, it means the Fed will remain comfortable in sitting - opting not to cut rates at the next FOMC meeting at the end of July. Construction Impact:  The construction activity will not improve without a reduction in interest rates. The latest data suggests high-inflation premiums and restrained monetary policy will remain in place beyond the July 2025 meeting. Even if rate cuts materialize at the September 2025 Federal Open Market Committee (FOMC) meeting, given lags, the impacts probably won’t materialize until after the peak construction season (April thru August) has passed. If so, real private construction will take a step back in 2025. Next Year’s Planning Guidance:  Tariff policy adds to the probability of inflation. I expect inflation will become evident in the fourth quarter. At a minimum, this delays when the Fed will act and how aggressively it acts. Furthermore, the One Big Beautiful Bill Act adds support to long-term interest rates. If this materializes, a significant recovery in construction activity could be delayed until the second half of 2026 – perhaps later.   About The Sullivan Report The Sullivan Report   delivers subscription-based economic forecasts and market updates tailored to the cement, concrete, construction, and aggregates industries. Its flagship publication, the Cement Outlook , is released three times a year and features 5-year forecast projections, expert analysis, and actionable insights to support informed decision-making and long-term strategic planning amid an evolving economic landscape. Guided by renowned economist Ed Sullivan, The Sullivan Report also offers keynote presentations and customized forecasting services for organizations and regions seeking deeper, data-driven market intelligence. For more information, message us here, visit TheSullivanReport.com ,  or email us at   info@thesullivanreport.com .

Market Update Stagflation Rattling the U.S. Economy This week’s economic data, on its surface, presents a stronger than expected economic picture. Headline GDP growth of 3% exceeded most expectations even in the context of slower consumer spending. Headline consumer confidence edged up, although the present situation index eased a bit. Inflation measured by the personal consumer expenditures came in at 2.8% year-over-year, a bit stronger than expected - and now stands a tic higher than the level began earlier this year.  Combined, these data suggest the economy’s resilience is intact. Solid economic growth and slightly rising inflation is the context in which the Federal Reserve decided to hold rates steady. Then came the jobs report.  Roughly 150,000 net new jobs monthly reflect a comfortably growing economy. Monthly job creation for July slowed to 73,000 net new jobs.  June job creation was revised down considerably, from 147,000 net new jobs created to only 14,000 net new jobs.  Strong job creation has been a key factor in the economy’s resiliency over the past few years. Finally, tariffs took center stage. Several companies reported tariffs had an adverse impact on their earnings.  General Motors calculated that tariffs will cost them between $4 billion to $5 billion in 2025.  These assessments were followed by the Administration’s announcement of higher tariff rates, particularly on Canada. About The Sullivan Report The Sullivan Report   delivers subscription-based economic forecasts and market updates tailored to the cement, concrete, construction, and aggregates industries. Its flagship publication, the Cement Outlook , is released three times a year and features 5-year forecast projections, expert analysis, and actionable insights to support informed decision-making and long-term strategic planning amid an evolving economic landscape. Guided by renowned economist Ed Sullivan, The Sullivan Report also offers keynote presentations and customized forecasting services for organizations and regions seeking deeper, data-driven market intelligence. For more information, message us here, visit TheSullivanReport.com ,  or email us at info@thesullivanreport.com .