Public construction spending in the country hit a 24-year low in the second quarter of this year, reaching 1.42 percent of the nation’s gross domestic product (the sum of all economic activity—GDP), according to a report from the Census Bureau.
This is the second quarter of decline in spending relative to GDP, but is part of a longer trend dating back to the second quarter of 2009, when spending reached its highest point of 2.22 percent of GDP(remember the “stimulus”?).
The reason the Census Bureau uses the relative to GDP relationship is that it shows the spending in terms of the total economy, not in terms of inflated dollars spent on construction. But, the Federal Reserve says there is no inflation, you say. The U.S. Department of Transportation begs to differ, noting in a report issued earlier this summer that the cost of highway construction has gone up 67 percent…yes, twothirds…since 2003.
Trends show that the infrastructure spending has never recovered from the 2008 Great Recession and, in fact, has dropped well below most historical averages, demonstrating infrastructure has lost the political battle for its share of the federal, state and local budgets.
The Census Bureau’s Value of Construction Put in Place (VIP) survey, shows the seasonally adjusted annual rate of U.S. public construction spending for Highways and Streets was $82.44 billion for June this year, a 6.6 percent drop from May and an 8.1 percent decrease from the same month in 201