Impact of Infrastructure on the Economy

Infrastructure’s impact on the economy is massive.  Not only are infrastructure projects one of the most consistently productive investments that governments can make, but the lack of investment in the US’s infrastructure is actively costing us hundreds of billions of dollars each year.  The ASCE’s research on the economic impacts of our failure to properly maintain our infrastructure points to a punishing cost to the economy – a cumulative $3.1 trillion in lost GDP and $1.1 trillion in lost trade between 2012 and 2020.  They point out, in their Failure to Act report, that two of the implications of this are 3.5 million jobs that will either be lost or won’t be created, and a cumulative loss of $28,300 earnings for the average household over that period.

Lest you be confused by the cumulative nature of these predictions by the ASCE, I would point out that these costs are already happening – the ASCE’s calculations result from following an existing trend of failing and congested infrastructure that is imposing costs on the economy, and their data merely add up the total costs between 2012 and 2020.  If their data is correct, this means that our infrastructure problems represent (right now) a downward drag of at least -1% annual GDP growth. If left untended, our infrastructure problems will eventually be dragging down annual GDP growth by 2 or even 3 percent by 2020.

What’s frightening is that these numbers are only going to keep getting bigger as time goes by.  Truly, it’s not the period between now and 2020 that we need to worry about – it’s the decades that will come after, when the price for fixing (and for failing to fix) our infrastructure systems will become truly impossible to deal with.  The cost of failing to repair and expand our infrastructure systems to meet the demands being place on them will only grow as time goes by – between 2020 and 2040, it would add up to an additional cumulative loss of $18 trillion GDP, 7 million jobs lost, and an average of $6,300 less per household per year.

The economic impacts of our shortsighted infrastructure policies aren’t huge, compared to some of our other issues – education and corruption are still more important, from an economic point of view.  But they add up to a very significant contribution to our faltering economic outlook, and will only get worse as long as we fail to attend to them.

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