Despite challenges such as high interest rates, slowly decreasing inflation, the presidential election and inclement weather, 2024 was a positive year for many. Photo: Astec
Contractors had to navigate many factors in 2024.
Between high interest rates, stagnating inflation and the 2024 presidential election – just to name a few – it seemed there was always something this year working against those producing construction materials, as well as manufacturers and dealers.
In the face of all those headwinds, though, many look back on the year fondly.
“We were thankful to experience strong demand in all of our major product segments,” says Riley Arndt, strategic account manager at Superior Industries. “Despite some producers still facing workforce shortages, construction material products continue to have a strong demand.”
Clem Cazalot, CEO of Machinery Partner, a Boston-based equipment dealer, says 2024 was not only a successful year, but one of notable growth for the company.
“In 2024, Machinery Partner solidified its industry presence, expanding from 23 to 48 states, with 180 service technicians and key partnerships, such as Hyundai Doosan Infracore for critical engine repairs,” Cazalot says. “We diversified from aggregates into recycling, concrete and forestry, deploying over 150 plants. The market has shifted from supply scarcity to surplus, empowering buyers.”
Maverick Environmental Equipment, an Ohio-based dealer, says 2024 was sluggish for a large part of the year. But business picked up near the end of the third quarter, with the company pointing to one notable event as a catalytst.
“[We] began to rebound in September in sales, rental, parts and service,” says Tim Smith, managing partner at Maverick. “I believe the driving factor was the [presidential] election and, since the change in administration [became official], there has been a very positive buzz about the economy improving in our industry. Q4 2024 is looking strong to finish the year.”
Economy
In the waning months of 2024, the economy showed marked improvement over the first three quarters of the year.
Interest rates have came down 75 basis points, with decreases in September (50 basis points) and early November (25 basis points). The federal funds rate currently sits at between 4.5 and 4.75 percent. The last time the rate was this low was February 2023.
Similarly, inflation has decreased slowly but surely over the last two and a half years. In June 2022, inflation hit a 10-year high, reaching 9.1 percent. As of October 2024, inflation was down to 2.6 percent.
Additional interest rate decreases and subsequent dips in inflation are anticipated through the rest of 2024 and throughout 2025, according to industry economists.
“I think in December [the Federal Reserve will cut] 25 basis points, and I think they continue to cut [rates] throughout the course of 2025,” says Richard Branch, chief economist at Dodge Construction Network. “Our forecast has a 25-basis-point rate cut in each quarter throughout 2025.”
Because inflation is still slightly above the Fed’s target goal, Branch does not anticipate interest rate cuts to happen rapidly.
“[Inflation] is still above [the Fed’s] target rate of 2 percent, so they don’t want to be overly aggressive with rate cuts and fear restoking inflation,” Branch says. “Nor is the labor market collapsing and cracking. So, there is no need to cut rates quickly. Between now and the end of next year, we’re looking at about 150 basis points lower interest rates. That’s pretty significant.”