Stimulus
legislation considered by the U.S. House of Representatives includes
approximately $149 billion of funding to be obligated by September 30, 2009,
for infrastructure and public
building investment provisions, according to a tabulation by AGC.
Stimulus legislation considered by the U.S. House of Representatives includes approximately
$149 billion of funding to be obligated by September 30, 2009, for
infrastructure and public building
investment provisions, according to a tabulation by AGC.
Transportation infrastructure ($44 billion) includes $30 billion for highway
and bridge construction, $9 billion for transit and $3 billion for airport
improvement grants. Water and environmental infrastructure ($17 billion)
includes $6 billion for the Clean Water State Revolving Fund (SRF), $4.5
billion for the Corps of Engineers and $2 billion for the Drinking Water SRF.
Building infrastructure ($55 billion) includes $14 billion for K-12 school
construction, $6 billion for higher education facilities, $6.7 billion for
General Services Administration federal buildings and facilities, $5 billion
for a public housing capital fund, $4.2 billion for Department of Defense (DOD)
medical facilities, $2.1 billion for DOD facilities renovations, $3.1 billion
for construction on public lands and parks, and 22 other categories. Energy and
technology ($28 billion) includes $11 billion for the electricity grid, $6.9
billion for local government energy efficiency block grants, $6 billion for
wireless and broadband grants, and $2.5 billion for energy efficiency housing
retrofits.
There are also numerous
tax provisions
that would encourage construction activity (through faster write-offs, tax
credits or favorable bond provisions) or assist construction firms (through
extending loss carrybacks from two to five years, repealing the 3% withholding
on government contracts currently slated to begin in 2011, and faster write-offs
on equipment). A Senate
bill is expected to be marked up; leaders in both houses hope to pass an
identical bill and have it ready for President Obama’s signature by
mid-February.
AGC has testified to three
House committees in favor of infrastructure spending as a stimulus measure.
Last month, Professor Stephen Fuller of George Mason University testified on
AGC’s behalf to the House Transportation and Infrastructure Committee regarding
the
impact of nonresidential
construction spending on jobs, gross domestic product (GDP) and
personal earnings. (AGC testimonies and other information on stimulus are at
www.agc.org.)
Economic
indicators continue
to be almost universally negative. Today, the National Association for Business
Economics (
www.nabe.com)
reported that its quarterly survey of 105 corporate economists, conducted
between December 17 and January 8, depicted “the worst
business conditions since the
survey began in 1982….For a second
consecutive time, overall
capital-spending
plans for structures over the next 12 months remained decidedly
negative….Only 5% of respondents now expect positive growth in capital spending
on structures over the next 12 months.” On January 14, the Federal Reserve
reported in its latest “Beige Book” survey of business conditions across the 12
Fed districts (referred to by the names of the headquarters cities), “Overall
economic activity continued to weaken across almost all of the Federal Reserve
Districts since the previous reporting period….Commercial real estate markets deteriorated in most Districts, with
weakening construction noted in several Districts….Reports about
commercial construction activity
also were downbeat. In the Philadelphia District, commercial construction
activity continued to fall. Cleveland reported that construction backlogs have
declined for some contractors. Commercial contractors in the Atlanta and
Chicago Districts reported declines in building activity and noted that more
projects were cancelled or postponed. In St. Louis, contacts in commercial and
industrial construction predicted a challenging environment in early 2009. San
Francisco reported that commercial construction activity was very limited.
Construction-related manufacturing contacts in the Dallas District reported
that demand from commercial construction is shrinking
rapidly.”
The
producer price
index (PPI) for inputs to construction industries slumped 2.5% in
December and finished the year only 2.7% higher than a year earlier, compared
to a 4.8% rise in 2007, the Bureau of Labor Statistics (BLS) reported on
January 15. The rise was the smallest since 2003. The PPI for highway and
street construction tumbled 5.4% for the month and 0.8% for the year; other
heavy construction, -3.5% and 1.4%; nonresidential buildings, -2.4% and 2.2%;
multi-unit residential buildings, -1.7% and 2.9%; and single-unit, -1.3% and
4.9%. The monthly declines were driven by drops in the PPIs for diesel fuel,
-24% and -37%; steel mill products, -12% and 5.3%; copper and brass mill
shapes, -9.6% and -24%; aluminum, -4.9% and -5.9%; and plastic construction
products, -1.5% and 3.3%. The index for asphalt paving mixtures and blocks sank
8.3% in December but still rose 33% for the year. The PPI for concrete products
was flat for the month and climbed 4.2% for the year; gypsum products were up
0.1% and 7.3%. Indexes for finished building and subcontractor categories
differed sharply: new warehouse construction, -0.2% and 6.3%; offices, -0.1%
and 6.1%; industrial buildings, 0% and 7.6%; schools, 4.8% and 12.7%. PPIs for
nonresidential building work by concrete contractors rose 0.2% and 5.0%;
electrical contractors, 0.9% and 5.1%; plumbing contractors, 1.4% and 9.2%; and
roofing contractors, 2.3% and 13%.
The
consumer price
index (CPI) for all urban consumers fell 0.7%, seasonally
adjusted, in December and rose just 0.1% for the year, the sixth year in a row
the CPI has risen less than the construction PPI, BLS reported on January 16.
The CPI for urban wage earners and clerical workers, which is used to adjust
many labor contracts in construction and other industries, fell 0.5% for the 12
months through December 2008.
See below for the December 2008 PPI Table. Links
