North American Infrastructure Boom ?

In 2003 and 2005 the American Society of Civil Engineers prepared a report card on the state of US infrastructure.  This scorecard has attracted a lot of attention especially the estimate of the US$1.6 trillion investment that the ASCE believes is required to upgrade US infrastructure to an acceptable level .  It was the theme of this year's GITA annual conference and I've even seen an ad in the New Yorker referring to it. 

In this year of a presidential election in the US and talk of the worst economic crisis since the Great Depression, there has been a lot of discussion of economic stimulus packages to revive the economy.  Parallels have been drawn to Franklin Delano Roosevelt's New Deal that committed Federal funds to infrastructure and other development to help lift the US economy out of the depression.  Politicians seem to be looking at ways to not only improve US infrastructure, but also ways to create employment.  Former New York City transportation commissioner “Gridlock Sam” Schwartz is quoted as saying “When infrastructure declines, we’re going to become a second-rate country.”  Senate Majority Leader Harry Reid has said it was "the right thing to do" for the infrastructure and the economy. "For every billion dollars we spend in our crumbling infrastructure, 47,000 high-paying jobs are created."  The US DOT’s estimate of how many jobs are generated per $1 billion invested in transportation by the federal government was 47,500.  But in late March, the US DOT issued a revised estimate that every $1 billion invested into transportation provides 30,076 jobs.   Most recently, in mid-April the US DOT modified the figure to 34,799 jobs, and there are caveats about what this number actually means. 

In June of this year Senator Obama, then the presumptive Democratic candidate for President, made a speech to the US Conference of Mayors annual meeting in Florida where he talked about "rebuilding America’s essential but crumbling infrastructure", that the US needs "to do more, not less," and then he promised to "launch a National Infrastructure Reinvestment Bank that will invest $60 billion over ten years and create nearly two million new jobs."   Obama said that Federal money should be invested in a world-class transit system, green energy technology, ports, roads, and high-speed rail.

All of this suggests that we may be in for a boom in investment in infrastructure in North America.

Comments

[Paul Ramsey]

Infrastructure boom or coming infrastructure collapse? The lessons of 1992 are a bit worrying -- Bill Clinton came into power with a Democratic congress but still couldn't pass a decent stimulus package. Perhaps this time will be different, the set-up is pretty similar. Recession, deficit, etc.

[Ben R.]

The infrastructure development is needed regardless of the country's current economic woes.

Using one as a justification for another can be problematic, because arguments have been made government job creation on infrastructure development is not necessarily a boon to the larger economy in a recession (the higher pay of government jobs crowd out private job creation).

Of course, it makes a superb political argument for the investment if unemployment starts edging closer to 10% and New Deal language is invoked.