Industry Analysis

Infrastructure Spending in the United States

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We have curated seven additional pieces of information, data, and/or statistics surrounding infrastructure spending in the United States. This has included, but not been limited to, whether there has been an increase in infrastructure spend, both for new or maintenance spending, in 2020, and any projections for 2021. Infrastructure has been defined as roads, dams, airports, and water/electrical systems. In order to provide one cohesive easy to read document, we have also included the initial findings in this report.

Public Spending on Transportation and Water Infrastructure, 2017

  • Business Roundtable, a group of major U.S. companies, “estimates that an infrastructure investment boost by 1% of gross domestic product (GDP) each year could generate $320 billion in economic output in 2020 alone, and an $83 billion infrastructure package could produce 1.7 million jobs over three years.”
  • Global consulting firm McKinsey concurs with the Business Roundtable research and estimates that increasing U.S. infrastructure spending by 1% of GDP would add 1.5 million jobs [see page 4] to the economy, which is only 200,000 under the figure that Business Roundtable provided. McKinsey also asserts that “$150 billion per year will be required between 2017 and 2030 to keep abreast of all the country’s infrastructure needs.”
  • Since the 1980s, the American Society of Civil Engineers (ASCE) has provided “report cards” on the state of U.S. infrastructure. “In its 2017 report, the ASCE found that the nation’s infrastructure averaged a “D+,” meaning that conditions were “mostly below standard,” exhibiting “significant deterioration,” with a “strong risk of failure.” The group estimated that there is a total “infrastructure gap” of more than $2 trillion needed by 2025 that if failed to be addressed would result in almost $4 trillion of GDP lost.”
  • Transportation will require the largest amount of funding. “The U.S. Government Accountability Office finds that nearly one in four bridges are deficient, with 10% categorized as structurally deficient and 14% categorized as functionally obsolete. While America’s airports carry the most passengers of any country in the world, its aviation infrastructure is also overburdened, with some 20% of all arrivals and departures delayed in 2019, according to the Department of Transportation’s Bureau of Transportation Statistics.” The 2020 data is likely skewed because of COVID-19, as the delayed arrival rate is only 9.21%. The number of flights canceled reflects that supposition. [273,293 flight cancellations versus only 119,514 in 2019 and only 99,093 for 2018].
  • The country’s rail systems are somewhat more difficult to figure out. “U.S. commercial rail, a large portion of which is owned by the private freight industry, is among the most developed in the world, moving nearly 40% of the nation’s goods. At the same time, the focus on freight rail has relegated passenger rail to a lower priority. Amtrak, the United States’ main provider of intercity passenger rail, has more than $30 billion in backlog of infrastructure investments.
  • The Environmental Protection Agency (EPA) has postulated that “drinking water, wastewater, and irrigation systems will require $632 billion in additional investment over the next decade. Ports and waterways, which handle over one-fourth of the country’s freight transport, face mounting delays.”
  • Spending on infrastructure amounted to $29 billion in the United States for the year 2019. On top of that, the federal government also transferred $67 billion for state infrastructure spending. “When leaving out federal government transfers, most infrastructure spending comes directly from state and local governments.” In 2017, $162 billion was spent on infrastructure projects.
  • Given the urgent and extensive nature of America’s infrastructure challenges, it may be surprising to see highway, street, and bridge construction receive relatively little contract money compared to other agency initiatives, as depicted by the graphic below. “Yet, the Department of Transportation encompasses several sub-agencies, all of which demand considerable funding to ensure the safety and convenience of travelers.” The Federal Aviation Administration, for example, accounts for the $2.2 billion spent on air transportation support activities.

Top Spending areas for the DOT

  • As the United States undertakes the task of recovering from the COVID-19-induced recession, S&P Global Ratings sees a “growing risk of continued underinvestment in infrastructure.” While the pandemic certainly has created new budgetary challenges, along with work restrictions, it also has provided an opportunity for renewed infrastructure spending. S&P Global Economics “estimates that a $2.1 trillion boost in public infrastructure spending over 10 years, to the levels (relative to GDP) of the mid-20th century, could add as much as $5.7 trillion to the U.S. over the next decade, creating 2.3 million jobs by 2024 as the work is being completed.”
  • The American Society of Civil Engineers (ASCE) has provided a status report surrounding COVID-19’s impacts on America’s infrastructure. Published in June 2020, they point out that “record rainfall in May 2020 contributed to the catastrophic failure of two high hazard potential dams in Michigan.” This led to thousands of residents being evacuated, and extensive property damage. Their stand is that “infrastructure failure during this pandemic, or at any other time, is unacceptable. To ensure that dams in the United States receive adequate maintenance and can continue to protect nearby communities and regional economies, they recommend fully funding the High Hazard Potential Dam Rehabilitation (HHPDR) program at the authorized amount of $60 million for FY21.” Additionally, they are also “encouraging Congress to pass the Dam Safety Improvement Act that makes technical changes to the HHPDR program to ensure more seamless implementation.” This helpful source also discusses infrastructure surrounding airports, drinking water, in;and waterways, ports, roads, transit, and wastewater.
  • According to the Congress of the United States, federal spending on highways, which also includes the term roads, totaled $46 billion in 2019. “Most of those outlays were for grants to state and local governments to support their spending on capital projects. (Those governments typically spend roughly three times as much of their own funds on highways each year, not only on capital projects but also to operate and maintain roads.)” That $46 billion also includes spending for federal programs that subsidize state and local governments’ borrowing for highway projects.
  • The United States was ranked 9th in the world for their overall infrastructure by the World Economic Forum, and was in 11th place for the quality of its roads. According to The Whitehouse, “without continued investment and maintenance, America’s infrastructure will continue to age, deteriorate in quality and performance, and gradually contribute less to American economic output.”
  • Deloitte research reveals the United States is missing $2.1 trillion [see page 4] in infrastructure investment. As the graphic below illustrates, surface transportation, which includes highways/roads and railways, is the biggest single area that needs funding. Of the more than $2 trillion needed, less than half has already been secured, leaving $941 billion outstanding.

Americas infrastructure investment gap

GLENN TREVOR
Glenn is the Lead Operations Research Analyst at Simple Manifestation with experience in research, statistical data analysis and interview techniques. A holder of degree in Economics. A true specialist in quantitative and qualitative research.

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