Infrastructure spending declines even with stimulus

| 7/8/2009

Even with federal stimulus spending that put shovels in the ground on new infrastructure projects, analysts predict an overall decline of 4.3 percent on infrastructure in 2009.

Analysts from IHS Global Insight stated in a report that they expect a 5.5 percent decline in highway spending despite a $48 billion infusion to the U.S. Department of Transportation from the stimulus package passed by Congress earlier this year. The U.S. DOT had, at last tally, allocated $16 billion of its stimulus money to specific highway projects in need of funding.

“This sector is not expected to see positive year-over-year growth until 2010,” the authors of the report wrote. IHS Global Insight provides market analysis for freight, transportation, power, real estate, agriculture and other sectors.

State budget shortfalls continue to plague the market for infrastructure construction, according to IHS Global Insight’s construction division.

Analysts predict a further decline of 1.6 percent for infrastructure in 2010 followed by an anticipated 2.4 percent growth in 2011. The bounce-back will occur “as tax receipts improve for state governments, and the federal stimulus package, totaling approximately $120 billion for infrastructure, is fully implemented,” the authors of the report wrote.

Stimulus money is being used for more than just roads, with improvements coming for power grids, water systems, waste disposal and oil refineries and pipelines.

“With the exception of power, all infrastructure sub-sectors are expected to drop in 2009,” IHS Global Insight wrote.

Other forms of transportation construction, including high-speed rail and port renovations, will contract by 10.2 percent, the analysts wrote, with modest gains expected in 2011.

Click here to read the full report.

– By David Tanner, staff writer