Better Roads Staff
Real GDP, job growth and confidence recovered. Seemingly, the economy was again on a sustainable path of stronger growth and job creation in excess of 200,000 monthly. Once again, however, this proved to be a false start to stronger, sustained growth. The political games played by Congress over the debt ceiling exerted adverse influence on near-term growth. The debt ceiling debate injected new uncertainty and risk onto the economic landscape. Consumers, business and bank confidence was already weak and this added dose of risk hindered real economic activity.
Only recently has better economic news begun to surface – accented by the decline in the unemployment rate. This news could represent another false start. This first quarter of 2012, for example, could represent a significant challenge to economic growth. The payroll tax and extended unemployment insurance benefits will expire year-end. Federal aid to the states has already expired. Furthermore, the U.S. Energy Information Administration expects energy prices will rise. These conditions, and others, could result in significant first-quarter weakness. While PCA expects sustained, tepid economic growth, the potential for a new recession in 2012 cannot be dismissed.
If such a path develops for the economy, it does not imply a further significant step down in construction activity. Quite frankly, residential, nonresidential and public construction activities are already near floor levels. Rather, such a scenario suggests a longer recovery period for construction activity – perhaps by a year or more.
Perversely, it could very well be that weakened economic conditions could result in a shift in political thinking and add pressure to result in a comprehensive new highway bill that addresses the country’s future needs – and not just a patchwork of fixes. Demographics don’t lie. In 20 years the United States’ driving age population is expected to grow by 50 million more licensed drivers. Congestion will worsen and the adverse consequences associated with infrastructure neglect will multiply. The invisible taxes associated with inaction in expanded highway investment will increase.
An Expert Opinion:
Dennis Slater, president, Association of Equipment Manufacturers (AEM)
Sales of construction equipment continue to rebound from the depths of the recession, but there’s still uncertainty in the marketplace, both in the United States and globally. For a significant segment of our industry, there is still too little meaningful action on infrastructure funding. Our annual “outlook” survey cites highway funding as a major factor influencing future business.
With 2012 as an election year, this usually means campaign rhetoric instead of real action. But politicians are talking about jobs. It is a chance to put construction jobs “front and center” with not only presidential hopefuls but also legislators as they campaign in their districts.
We’ve used the “I Make America” pro-manufacturing campaign to spotlight infrastructure investment as a proven way to create and maintain jobs for American workers, for a sustainable recovery. We need to continue to frame the discussion for the general public and lawmakers: Infrastructure investment is not just a “potholes” issue that only benefits the construction industry; it is a critical business and quality-of-life issue. It affects every community, company, family and individual. An adequate transportation system translates into safer and more efficient travel that advances commerce and quality of life.
Congress needs to focus on policies that create and maintain jobs, not unnecessary and excessive regulatory and tax burdens. We have a special website – A Day in American Life (found at adayinamericanlife.com) – with real stories from real people in our AEM member companies that underscore how companies are collections of hard-working people, not faceless entities, and they make a positive difference in their communities.
Priority number one in 2012 is making more noise in Washington – a key issue is working to gain bipartisan understanding of and real action on transportation infrastructure legislation. We need Democrats and Republicans alike to stand up and have the political will to do what is needed for the long-term benefit of our economic well-being. And, especially in the current economic environment, we need to realistically look at where the money will come from. We know the current Highway Trust Fund is inadequate; we must look for other practical solutions that ensure the nation’s transportation needs are met.
An Expert Opinion:
John Horsley, executive director,
The American Association of State Highway and Transportation Officials (AASHTO)
While the federal highway and transit programs have been operating under a series of eight extensions since expiration of SAFETEA-LU in September 2009, recent developments in Congress are providing encouraging signs for 2012.
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