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Infrastructure Spending Seen Set to Fall in 2009 Despite Stimulus
Positive impact of stimulus, growing tax receipts to be felt in 2010, IHS Global Insight reports
Lexington, MA — July 31, 2009 — 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 a report from IHS Global Insight.
In its "Second Quarter 2009 U.S. Infrastructure Market Analysis," IHS Global Insight's Construction Service reports that the infrastructure market has been a victim of large state government deficits and funding shortfalls to cities and towns.
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. Transportation construction will struggle in 2009, for example, 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.
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 to keep 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.
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 Q3 2011.
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.
An executive summary of the IHS report is available (registration required) at www.ihsglobalinsight.com/constructionoutlook.
In its "Second Quarter 2009 U.S. Infrastructure Market Analysis," IHS Global Insight's Construction Service reports that the infrastructure market has been a victim of large state government deficits and funding shortfalls to cities and towns.
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. Transportation construction will struggle in 2009, for example, 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.
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 to keep 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.
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 Q3 2011.
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.
An executive summary of the IHS report is available (registration required) at www.ihsglobalinsight.com/constructionoutlook.
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