Today we have a guest post from Michael Keating.
Increased consumer spending, a rising stock market, and robust home valuations all signal that the U.S. economy is strengthening. Sujit CanagaRetna, a fiscal analyst for the Lexington, Ky.-based Council of State Governments, says improvements in gross domestic product (GDP), coupled with shrinking unemployment numbers, are among the signs the economy is on an upswing. “Improving export figures, a booming energy market driven by natural gas extractions, and a recovering manufacturing sector are some of the positive elements in the U.S. economy that offer room for cautious optimism,” he adds.
As the economy strengthens, governments will loosen their purse strings. In 2014, government purchases of goods and services will reach $3.09 trillion, up from $3.02 trillion in 2013, according to Lexington, Mass.-based economic forecaster IHS Global Insight. For 2013, federal government purchases of goods and services will total $1.17 trillion, while state and local government purchases will reach $1.86 trillion. By 2018, government purchases of goods and services will rebound to $3.35 trillion, IHS predicts. Of that amount, state and local purchases will total about $2.13 trillion.
News flash: job growth in the U.S. is still sluggish. The Associated Press has reported, based on U.S. Bureau of Labor Statistics data, that unemployment rates rose in more than half of U.S. states in July, and that fewer states added jobs in the most recent month reported.
The value of public works/infrastructure construction underway in the U.S. should reach $100 billion in 2013, which is 1 percent less than 2012 public works construction levels, according to the “2013 Dodge Construction Outlook.”
State and local governments account for approximately 75 percent of all infrastructure spending in the U.S., with the remainder supplied by the federal government, according to “Infrastructure 2013: Global Priorities, Global Insights,” a joint report from the Urban Land Institute (ULI) and Ernst & Young.
Projects in the waterworks sector – potable water, wastewater, and storm water – are being driven by the need to replace aging, underground infrastructure, by environmental regulations, and by U.S. Environmental Protection Agency consent decrees, says Dona Storey, the American Express OPEN Advisor on Procurement. “Cuts in public funding are challenging municipalities’ efforts to address these issues. However, potential funding from Private Activity Bonds (PABs) and revenue streams from new storm water fees may drive greater private-sector investment,” says Storey.
For the construction trades, things are looking up in road building. In the five years to 2017, revenue for the road & highway construction industry is anticipated to increase at an average annual rate of 2.2 percent to $53.5 billion, say IBISWorld analysts in a recent report.
Passage in mid-June, 2012 of the Moving Ahead for Progress in the 21st Century Act (MAP-21), should help the road construction industry rebound somewhat. A boost in tax receipts from the improving economy will help state & local governments increase transportation infrastructure spending. For ordering info for the new Aug 2013 IBISWorld Industry Report 23411a, go here.
One government-funded road infrastructure project worth noting is the construction of a three-sided bridge in White Plains, N.Y. The New York State Department of Transportation designed the bridge project in-house, which includes work on the I-287 Exit 8 interchange. The bridge serves as the westbound crossing over the Mamaroneck River on Westchester Ave.
Avon, Conn.-based Oldcastle Precast Inc. provided 47 precast rigid frame sections as part of the project. The sections cover a 23-foot span with a 9-foot 8-inch rise. Yonkers, N.Y.-based ECCO III is the contractor. The completion date for the project is slated for later this month.
According to the American Institute of Architects’ (AIA) Consensus Construction Forecast Panel, we should see healthy if unspectacular gains for the remainder of 2013 in nonresidential construction activity (including government and institutional structures). The AIA panel predicts construction spending for buildings will rise by 5 percent in 2013 before accelerating to 7.2 percent in 2014.
Michael Keating is senior editor for Government Product News and the GPN website. The first part of his mid-year 2013 forecast is here. He can be reached via email at email@example.com or at firstname.lastname@example.org.