A key feature of President-elect Donald Trump’s election campaign is an increase in US infrastructural spending. While this has sparked many questions about the US government’s ability to afford a large infrastructure development programme, the likelihood that the US congress will approve such an initiative, and the economic benefits of infrastructural development, it is very clear that the US economy urgently needs to renew its infrastructure.
This need for infrastructural renewal in reflected in two key pieces of information. Firstly, according the US Bureau of Economic Analysis (BEA), the government’s current spend on infrastructure is the lowest in 30 years when measured relative to GDP (see chart attached). In addition, apart from a short-lived revival in infrastructure spending as part of the 2009 Recovery Act, US infrastructure spending has been steadily slowing for decades, and is well below the level of development that existed during the 1960s and early 1970s.
Secondly, according to the 2013 American Infrastructure Report card, which is compiled by the American Society of Civil Engineers, the US scored a dismal D+ grade, well below a target grade of B. The scoring is based on a simple A to F school report card format, which provides a comprehensive assessment of current infrastructure conditions and needs, both assigning grades and making recommendations for how to raise the grades. A equates to exceptional, B is good, C is Mediocre, D is poor and F is failing. The grades are assigned according to the following eight criteria: capacity, condition, funding, future need, operation and maintenance, public safety, resilience, and innovation. Since 1998, the US infrastructure grades have been failing, averaging only D+ in the latest survey, due to delayed maintenance and underinvestment across most categories. The 2013 grades ranged from a high of B- for solid waste to a low of D- for inland waterways and levees (see chart attached).
Out of interest, using a similar grade rating, South Africa’s infrastructure received a C- grade, although the report was compiled in 2011. Since then SA infrastructural development has been somewhat neglected.
We will be providing a lot more information and analysis of US and SA infrastructure over the coming weeks.
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