Engineers Warn Huge Infrastructure Spending Gap Hurts Economy

May 10, 2016 by Jerry Hirsch, @Jerryhirsch

A lack of investment in roads, highways, bridges and other infrastructure threatens the nation’s economy, the American Society of Civil Engineers said in a report Tuesday.

In its “Failure to Act” study, the engineering trade group sounded a warning, but also noted some recent improvement in how the nation funds infrastructure spending.

The report estimates a spending gap of about $2.25 trillion is developing during the period from 2016 through 2025.  About half of that is a shortfall in needed investment in surface infrastructure.  Another $916 billion represents the spending gap on water and wastewater systems, the ASCE said.

This lack of investment will hurt the economy, the report said.

“Prices will increase if surface transportation systems worsen, ports, airports and inland waterways become outdated or congested, and if water, waste-water and electricity infrastructure systems deteriorate or fail to keep up with changing demand,” according to the report.

Related: Infrastructure Investment Lags as Alternative Trade Lanes Emerge

From now through 2025, households will lose $3,400 in disposable income annually due to infrastructure deficiencies, the engineering group said.

“Over time, these impacts will also affect businesses’ ability to provide well-paying jobs, further reducing incomes. If this investment gap is not addressed throughout the nation’s infrastructure sectors by 2025, the economy is expected to lose almost $4 trillion in GDP, resulting in a loss of 2.5 million jobs in 2025,” the report said.

In its analysis, the engineering trade group looked at two issues: The first was underspending on maintaining or rebuilding existing infrastructure that currently needs repair or replacement. The second was the need to build new infrastructure for a growing U.S. population.

The report said big metropolitan areas suffer the most from underspending on surface transportation because urban highways, bridges and transit systems are generally in worse condition today due to more congestion, which in turn creates faster rates of deterioration.

The federal government has taken a step to address the problem. The latest federal funding authorization budgets an average of $56.2 billion per year for highway and transit programs from 2016-2020, a 7 percent increase over the prior authorization. The engineering group said that keeps overall federal transportation funding level is close to flat.

The group also noted that highway spending in recent years has focused on maintenance, a strategy that has slowly improved the of U.S. roads.

The total miles of U.S. pavement rated mediocre or poor has dropped 17 percent in six years while the number of bridges considered structurally deficient has been reduced 14 percent during the same time frame, the engineering group said.

“While maintenance has improved, there is a flip side which is the reduction in capital spending,” the ASCE said. “The consequences are readily apparent — the total hours of highway congestion delay in the top 50 metro areas has grown 36 percent.”


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