Lack of Infrastructure Investment Threatens U.S. Economic Growth


The U.S. needs to invest about $2.7 trillion dollars in the nation's infrastructure by 2020 according to a new study from the American Society of Civil Engineers (ASCE). That total includes investment in airports, seaports and waterways, surface transport, and electricity.

Unfortunately, the ASCE calculates that at current and projected spending rates, the U.S. investment in infrastructure will come up short by about $1.1 trillion. And as the years go by, the gap increases. By 2040, spending will fall about $4.7 trillion short of what is needed.

The study has tried to incorporate the cost of failure into the total cost of investment in an effort to portray more accurately the overall cost to the U.S. economy of failing to make the improvements. For example, the ASCE estimates that unless the U.S. invests an additional $157 billion a year ($1.1 trillion total over the next 7 years) the cost to U.S. GDP over that period will be $3.1 trillion and the trade deficit will widen by $1.1 trillion. Individual consumers will have $3,100 less in annual personal disposable income, and consumer spending in the U.S will fall by $2.4 trillion.

As with any study of this kind, there are a couple of dangers. First, the ASCE has a dog in the hunt because civil engineers will be needed to lead the restoration and improvement of the country's infrastructure. Second, by trying to put a price tag on failing to act, the group risks cutting discussion off either before it starts or in arguments about methodology and arithmetic.

Still, it's a worthy endeavor. Perhaps the U.S. Congress will get the message that with interest rates at near zero, the country should invest in millions of jobs that will put people back to work and bring the nation's infrastructure up to a point where it can really support economic growth. Given the fight over the debt ceiling, though, that kind of spending has no chance of being approved. It's a pity.

The report is available here.

Filed under: 24/7 Wall St. Wire, Infrastructure, Research