Why Now Represents A Window Of Opportunity For U.S. Infrastructure

By on March 19, 2019

From Forbes:  An adjustment to the broader economy is coming. The recent government shutdown and general policy inertia are not helping matters. Rather than being an impediment to the economy, the U.S. government has a unique opportunity to take decisive action on aging and obsolete infrastructure to provide a firmer foundation for the future. The current supportive economic environment can shoulder the investment. That window will close, so the time to act is now.

Why is that so? Here are three reasons:

1. The economy is doing well.

In spite of the increased concern of the next economic downturn, the economy is still quite healthy. According to Fitch Ratings (registration required), the company for which I work, the U.S. had average annual gross domestic product growth of 2.2% from 2013-2017 while reaching a high of 2.9% in 2018, and is expected to sustain growth rates above 2.5% in 2019. That same report showed unemployment at a low 3.4%, inflation slightly above 2% and policy interest rates likely to remain below 4%.

Making a real effort to update the U.S. infrastructure would make the most sense now while the economic environment can still support the investment. Acting now would bolster and extend the current economic growth cycle and provide the foundation for decades of growth in the future. Conversely, putting it off until after a recession has begun would push the U.S. back even further. And with the U.S. already decades behind in terms of infrastructure development, waiting simply makes it more difficult.

2. Transportation is trending up.

The same healthy rate of growth can be seen through the lens of transportation infrastructure, where it does not appear that trouble is brewing. Toll roads and passenger air traffic are all trending at very healthy levels. Additionally, performance at ports throughout the country does not appear to be materially affected thus far by increased trade tensions between the United States and other parts of the world.

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About Dede Hance