In his first speech to a joint session of Congress, President Donald Trump vowed to repair what he called the nation’s “crumbling” infrastructure and initiate a “new program of national rebuilding.”
“Crumbling infrastructure will be replaced with new roads, bridges, tunnels, airports and railways gleaming across our very, very beautiful land,” Trump said. “I will be asking Congress to approve legislation that produces a $1 trillion investment in the infrastructure of the United States, financed through both public and private capital, creating millions of new jobs. This effort will be guided by two core principles: Buy American, and hire American.”
Coincidentally, the American Society of Civil Engineers (ASCE) conducts an assessment of the nation’s infrastructure conditions and needs, assigns grades, and makes recommendations for improvements in 16 categories of infrastructure—and releases a report, called a “report card,” every four years. The 2017 Infrastructure Report Card, released by ASCE, gives the U.S. infrastructure an overall grade of D+, the same grade it received in 2013, “suggesting only incremental progress was made over the last four years.” The report concludes it will take almost $4.6 trillion over the next eight years to bring all those systems up to an acceptable standard.
The report notes that key infrastructure categories and their grades are:
The report’s authors estimate the U.S. government and private sector will need to increase investment in the nation’s infrastructure from 2.5 percent to 3.5 percent of GDP by 2025 to raise its overall infrastructure score. If the government continues on the same trajectory it is currently on, the result will be $3.9 trillion in losses to the GDP and 2.5 million jobs lost, the authors estimate.
Then again, as CNN Money reports, the assessment from ASCE is based on estimates that call for much more spending than what federal agencies and other trade groups have said is needed for infrastructure. Some of those groups have a clear interest in triggering as much public spending as possible to benefit their members, CNN reports.
“It’s not lost on me that they are the ones who are going to be building much of this infrastructure, so it’s in their interest to talk down” the quality of infrastructure, Steve Ellis, vice president of Taxpayers for Common Sense, a nonpartisan group that monitors government spending, said on CNN.
Be that as it may, it is also interesting to consider, as a recent Bloomberg article points out, that for an example of infrastructure spending, leaders in the U.S. government should consider the experience of Canada’s Prime Minister, Justin Trudeau. His quest to stimulate the Canadian economy and boost long-term growth with an infrastructure spending program has been slow. Indeed, some 17 months after his election win, Trudeau’s government has completed only eight of the 1,274 roads, bridges, and other projects it has approved, Bloomberg reports.
Trudeau’s first budget pledged to provide “immediate” help to the economy via infrastructure expenditures. He’s found it challenging so far to spend the C$13.6 billion ($10 billion) allocated for his first two fiscal years. As of March 8, less than three percent of the projects approved since June have officially broken ground, though updates on start times are subject to a sizable lag, according to Infrastructure Canada, Bloomberg reports. Completed projects include an extension of the TransCanada Highway in Prince Edward Island.
“The hardest lesson to learn from Canada’s experience with infrastructure spending so far is just how long it takes for ‘shovel-ready’ projects to actually break ground,” Frances Donald, senior economist at Manulife Asset Management in Toronto, says in the article.
What are your thoughts on the U.S. infrastructure and its impact on supply chain cost and performance? Regardless of how much money will eventually be spent, where do you think improvement projects should begin?