America’s Trillion-Dollar Infrastructure Build-Out

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America’s Trillion-Dollar Infrastructure Build-Out

As we discussed in the previous trend this month, capital is both abundant and cheap. As a result, it’s a perfect opportunity to address America’s aging infrastructure, which will lower the cost of living, keep U.S. businesses competitive, and potentially put millions of unemployed people to work.

There’s no question that the nation’s infrastructure is in desperate need of upgrading, and that the costs of continuing to ignore the problem will be steep.  According to a report from the American Society of Civil Engineers (ASCE) “Business costs and, therefore, prices will increase if surface transportation systems worsen, ports, airports, and inland waterways become outdated or congested, and if water, wastewater and electricity infrastructure systems deteriorate or fail to keep up with changing demand.1

Greater costs to transport the wide array of imported goods that supply domestic manufacturers and rising costs for exports will affect our ability to compete in global markets for goods produced in the U.S. Irregular delivery of water and wastewater services and electricity will make production processes more expensive and divert household disposable income to these basic necessities.”

Specifically, goods will become more expensive to manufacture and to distribute if roads, airports, and the electric grid continue to deteriorate. Consumer prices will rise, business productivity will decline, and GDP will plummet, leading to job losses and decreases in personal income. The ASCE report calculates that infrastructure deficiencies will cost every U.S. household $3,400 per year until 2025. If the problems aren’t fixed before then, the cost will increase to $5,100 from 2026 to 2040.  From 2017 to 2040, the total costs will amount to $106,000 per household.

At the same time that household costs will rise, personal incomes will drop because businesses will be less productive and less efficient, resulting in business revenue losses of $7 trillion by 2025, and more than $29 trillion by 2040. Lower sales will force companies to reduce employment, leading to job losses of 2.5 million by 2025 and 5.8 million by 2040. The ASCE report estimates that the U.S. economy will lose $3.9 trillion in GDP by 2025, and $18 trillion by 2040.

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