Global Insight says infrastructure spending to fall despite stimulus
IHS Global Insight expects infrastructure spending to decline 1.6 percent in 2010 and then grow 2.4 percent in 2011 as tax receipts improve for state governments, and the federal stimulus package, totaling approximately $120 billion for infrastructure, is fully implemented.
The Trucker News Services
7/7/2009
LEXINGTON, Mass. — Despite an infusion of federal stimulus funds, infrastructure spending in the U.S. is still expected to decline 4.3 percent in 2009. According to the second-quarter 2009 U.S. Infrastructure Market Analysis from IHS Global Insight's Construction Service, the infrastructure market has been a victim of large state government deficits and funding shortfalls to cities and towns.
Without infrastructure spending in the power segment on several new oil refineries and pipeline construction, total infrastructure construction would slip 6.8 percent in 2009.
IHS Global Insight expects infrastructure spending to decline 1.6 percent in 2010 and then grow 2.4 percent in 2011 as tax receipts improve for state governments, and the federal stimulus package, totaling approximately $120 billion for infrastructure, is fully implemented.
With the exception of power, all infrastructure sub-sectors are expected to drop in 2009.
The sectors:
Power. Power construction, which includes power plants, electric distribution systems, natural gas and crude oil tanks, hydroelectric plants, and wind and solar energy facilities, should end 2009 nearly 1 percent higher than 2008. Lower building costs and slumping demand will reduce spending 16 percent in 2010; year-over-year declines will continue through the third quarter of 2011.
Highways and Streets. Nearly $16 billion of the $48 billion allocated from the federal stimulus package has already been assigned to specific highways and streets projects. However, this boost will be insufficient at keeping real highway and streets construction spending from falling 5.5 percent in 2009. This sector is not expected to see positive year-over-year growth until 2010.
Transportation. Transportation construction will struggle in 2009 with growth contracting 10.2 percent. Over the next five years, spending on transportation construction will be supported by the promotion and construction of additional high-speed rail lines and port renovations resulting from the expansion of the Panama Canal. Transportation construction will grow 1.7 percent in 2011 and 1.2 percent in 2011.
Sewage/Waste Disposal and Water Supply. Construction spending for water and sewer infrastructure is expected to fall 6.5 percent in 2009 despite increased federal stimulus spending. The additional federal stimulus funds and the gradual recoveries in the economy and housing market should set this sector up for a strong rebound in 2010 and 2011, growing 9.8 percent in 2010 and 7.4 percent in 2011.
The IHS Global Insight Construction Service provides analysis, forecasts, and data on the worldwide construction industry for building materials manufacturers, construction equipment, engineering and services companies, real estate investment and financial services firms, home improvement retailers and architectural firms, and the U.S. and other governments. To get the complete second-quarter 2009 U.S. Infrastructure Market Analysis Executive Summary, click here.
IHS Global Insight (www.globalinsight.com), an IHS company, provides the most comprehensive economic and financial information available on countries, regions and industries, using a unique combination of expertise, models, data and software within a common analytical framework to support planning and decision-making. Through the world's first same-day analysis and risk assessment service, IHS Global Insight provides immediate insightful analysis of market conditions and key events around the world, covering economic, political, and operational factors. IHS (NYSE: IHS) is a leading global source of critical information and insight, dedicated to providing the most complete and trusted information and expertise. IHS product and service solutions span four areas of information that encompass the most important concerns facing global business today: Energy, Product Lifecycle, Security, and Environment supported by Macroeconomics. IHS employs approximately 3,800 people in 20 countries.
Follow The Trucker on Twitter at www.twitter.com/truckertalk.
The Trucker staff may be reached to comment at editor@thetrucker.com.