Tag Archive for 'Associated Builders and Contractors'

Construction Input Prices Trend Lower in Jul

CEU2“Key input prices fell or were flat in all but one category in July and further downward pressure on input costs is likely to be reflected in next month’s report.” —ABC Chief Economist Anirban Basu.

PPI July 2015Prices for inputs to construction industries declined 0.1 percent in July after increasing 0.2 percent in June, according to the Aug. 14 producer price index release by the Bureau of Labor Statistics. Year-over-year prices were down 3 percent in July and have been down on an annual basis for each of the past eight months. Prices of inputs to nonresidential construction industries declined 0.3 percent on a monthly basis and are down 3.9 percent on a yearly basis.

“Key input prices fell or were flat in all but one category in July and it is important to note that further downward pressure on input costs is likely to be reflected in next month’s report, as well,” said Associated Builders and Contractors Chief Economist Anirban Basu.

“The state of affairs today is unprecedented,” said Basu. “Nonresidential construction spending has been recovering robustly in the U.S. in recent months—up more than 11 percent on a year-over-year basis. On top of that, the multifamily building boom continues in most major U.S. metropolitan areas.

“All things being equal, these circumstances should correspond with rising construction materials prices,” said Basu. “But as a reflection of how global the economy has become, America’s nonresidential construction recovery is taking place in the context of collapsing commodity prices. The latest round of commodity price decreases has been spawned by softening growth in China and ongoing increases in production of key inputs worldwide, including oil. However, this form of deflation should not be troubling to contractors. If anything, it will tend to boost profit margins for the average contractor, though falling commodity prices do not represent good news for construction firms heavily invested in oil and natural gas segments. These falling prices also imply slower increases in interest rates going forward, which will help extend the ongoing nonresidential construction recovery.”

Below are the key input prices for the month and the year.

  • Prices for plumbing fixtures remained flat on a monthly basis and are up 1.2 percent on a year-over-year basis.
  • Softwood lumber prices expanded 6.2 percent in July, but are 3.7 percent lower than a year ago.
  • Concrete product prices fell 0.1 percent in July, but are up 3.8 percent on a yearly basis.
  • Crude energy materials prices declined 6.2 percent in July and are down 37.8 percent on a year-over-year basis.
  • Fabricated structural metal product prices fell 0.7 percent for the month and have declined 0.4 percent on a year-over-year basis.
  • Natural gas prices declined 1.9 percent in July and are 38.4 percent lower than the same time one year ago.
  • Iron and steel prices were down 1.1 percent in July and are down 15 percent from the same time last year.
  • Prices for prepared asphalt, tar roofing, and siding fell 0.1 percent for the month and are down 0.4 percent on a year-ago basis.
  • Steel mill products prices fell 1 percent for the month and are 13.2 percent lower than one year ago.
  • Crude petroleum prices fell 12.3 percent in July and are down 48.8 percent from the same time one year ago.
  • Nonferrous wire and cable prices fell 1.3 percent on a monthly basis and are down 5.2 percent on a yearly basis.

To view the previous PPI report, click here

ABC Reports: Nonresidential Construction Spending Retains Momentum

CEU2“Today’s release represents the largest year-over-year growth during a calendar year’s first six months since the Census Bureau began tracking construction spending in 2002.” —ABC Chief Economist Anirban Basu.

Spending 8.3.15Nonresidential construction spending was unchanged on a month-over-month basis in June, but is up 11.5 percent on a year-over-year basis, according to a report released Aug. 3 by the U.S. Census Bureau. Nonresidential construction spending totaled $686.9 billion on a seasonally adjusted, annualized basis for the month and increased 9.8 percent during the year’s first half.

“Today’s release represents the largest year-over-year growth during a calendar year’s first six months since the Census Bureau began tracking construction spending in 2002 and serves as further proof of the recovery for nonresidential construction,” said Associated Builders and Contractors Chief Economist Anirban Basu. “Despite the lack of growth on a monthly basis in June, along with the overall economy’s lukewarm growth, most contractors are markedly busier than they were a year ago. May’s nonresidential construction figure was revised upward by 2.6 percent and April’s by 1.4 percent; therefore, it is conceivable that June’s estimate will eventually be revised higher as well.

“Exactly half of the 16 nonresidential construction sectors experienced growth in June,” said Basu. “On a yearly basis, 15 of those 16 sectors have expanded. However, the one sector that failed to grow during the past year, power, happens to be the largest. Had power simply remained unchanged during hat time period—it’s down 16.5 percent largely because of the fall in oil prices—nonresidential construction spending would currently stand at its highest level ever.”

Eight of 16 nonresidential construction sectors experienced spending increases in June on a monthly basis:

  • Lodging-related construction spending was up 3.9 percent on a monthly basis and 42.2 percent on a year-over-year basis.
  • Spending in the water supply category expanded 12.2 percent from May and is up 12 percent on an annual basis.
  • Highway and street-related construction spending expanded 1.3 percent in June and is up 14.8 percent compared to the same time last year.
  • Amusement and recreation-related construction spending was up 10.2 percent on a monthly basis and is up 39.2 percent from the same time last year.
  • Communication-related construction spending fell 6.8 percent for the month, but is up 13.4 percent compared to June 2014.
  • Construction spending in the transportation category grew 2.3 percent on a monthly basis and has expanded 9.6 percent on an annual basis.
  • Sewage and waste disposal-related construction spending increased 1.6 percent for the month and has expanded 5.3 percent on a 12-month basis.
  • Public safety-related construction spending grew 2.5 percent on a monthly basis, but is down 3.1 percent on a year-over-year basis.

Spending in eight nonresidential construction subsectors fell in June on a monthly basis:

  • Education-related construction spending fell 0.2 percent for the month, but is up 2.1 percent on a year-over-year basis.
  • Power-related construction spending fell 0.9 percent for the month and has declined 16.5 percent from June 2014, the steepest decline for any nonresidential category.
  • Commercial construction spending fell 4.3 percent in June, but is up 7.6 percent on a year-over-year basis.
  • Health care-related construction spending fell 0.9 percent for the month, but is up 6.3 percent on a year-over-year basis.
  • Manufacturing-related construction spending fell 0.8 percent in June, but is up 62.1 percent compared to June 2014.
  • Office-related construction spending fell 1.1 percent in June, but is up 24.4 percent from the same time one year ago.
  • Conservation and development-related construction spending fell 5.8 percent for the month, but is up 6.5 percent on a yearly basis.
  • Religious spending fell 6.2 percent for the month, but is up 5 percent from the same time last year.

To view the previous spending report, click here.

ABC Reports: Nonresidential Fixed Investment Falls in Second Quarter

CEU2“In the first half of 2015, both the broader economy and nonresidential investment lost the momentum they had coming into the year.” ABC Chief Economist Anirban Basu.

GDP_Q2_2015Nonresidential fixed investment fell by 0.6 percent during the second quarter after expanding by 1.6 percent during the first quarter, according to the July 30 real gross domestic product (GDP) report by the Bureau of Economic Analysis (BEA). For the economy as a whole, real GDP expanded by 2.3 percent (seasonally adjusted annual rate) during the second quarter following a 0.6 percent increase during the year’s first quarter. Note that the first quarter estimate for nonresidential fixed investment was revised upward from -3.4 percent annualized growth.

“In the first half of 2015, both the broader economy and nonresidential investment lost the momentum they had coming into the year,” said Associated Builders and Contractors Chief Economist Anirban Basu. “Rather than indicating renewed progress in terms of achieving a more robust recovery, today’s GDP release indicates that a variety of factors helped to stall investment in nonresidential structures. There are many viable explanations, including a weaker overall U.S. economy, a stronger U.S. dollar, decreased investment in structures related to the nation’s energy sector, soft public spending, and uncertainty regarding monetary policy and other abstracts of public policy. While the expectation is that the second half of the year will be better, unfortunately not much momentum is being delivered by the year’s initial six months.

“Perhaps the most salient facet of this GDP release was the revisions,” said Basu. “The BEA revised the first quarter estimate upward from -0.2 percent to 0.6 percent annualized growth. This is not surprising; many economists insisted that the economy did not shrink in the first quarter. However, the BEA also downwardly revised growth figures from the fourth quarter of 2011 to the fourth quarter of 2014. Over that period, GDP increased at an average annual rate of 2.1 percent, 0.3 percentage points lower than previously thought. These revisions could be a function of the agency’s ongoing effort to tackle residual seasonality, a pattern in which seasonal adjustments led to repeated first quarter slowdowns. It will take a few more quarters to understand the full impact of the improved seasonal adjustments.”

Performance of key segments during the first quarter:

  • Investment in nonresidential structures decreased at a 1.6 percent rate after decreasing at a 7.4 percent rate in the first quarter.
  • Personal consumption expenditures added 1.99 percent to GDP after contributing 1.19 percent in the first quarter.
  • Spending on goods grew 1.1 percent from the first quarter.
  • Real final sales of domestically produced output – minus changes in private inventories – increased 2.5 percent for the second quarter after a 2.5 percent increase in the first quarter.
  • Federal government spending decreased 1.1 percent in the second quarter after increasing by 1.1 percent in the first quarter.
  • Nondefense spending decreased 0.5 percent after expanding by 1.2 percent in the previous quarter.
  • National defense spending fell 1.5 percent after growing 1 percent in the first quarter.
  • State and local government spending grew 2 percent during the second quarter after a decrease of 0.8 percent in the first.

To view the previous GDP report, click here .

ABC Reports: June Construction Unemployment Rates Improve in 45 States from 2014

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Analysis by Bernard Markstein

Construction employment stalled nationally on a seasonally adjusted (SA) basis in June. However, as expected, not seasonally adjusted (NSA) employment increased from May. The result was that 38 states experienced a decline in their estimated NSA construction unemployment rate.

Construction activity and employment continues to improve from a year ago. Thus, on a year-over-year basis, the NSA construction unemployment rates for the country and 45 states were down in June.

For the first half of the year, SA construction jobs rose 105,000, while the industry added 262,000 jobs from June 2014 to June 2015 on an NSA basis.

The Census Bureau reported on July 1 that total SA nominal (current) dollar construction spending increased 0.8 percent in May. Nonresidential construction spending, which struggled in 2014, has advanced for four consecutive months. Total construction spending increased for six months straight.

The Top Five States

The five states with the lowest construction unemployment rates were:

  1. South Dakota*
  2. Nebraska*
  3. North Dakota
  4. Idaho and Montana (tie)

* Unemployment Rate for Construction and Mining

All of the top five states are in the same geographic region, although the Census Bureau places Idaho and Montana in a different census division (West North Central for Nebraska, North Dakota and South Dakota; Mountain for Idaho and Montana). Wyoming, which would fit in neatly with this group (part of the Mountain census division), was just out of the top five at number six (up from number eight in May).

Four of the top five states were also among the top five in May with a somewhat different order. South Dakota moved into the number one spot from being tied for second with North Dakota in May. Nebraska slipped into the second position from the first in May.

North Dakota fell to third place with the decline in its position, undoubtedly largely due to the slump in oil prices and the resulting slowdown in exploration and drilling new wells. Nonetheless, both the construction unemployment rate and the overall state unemployment rate are at a low level that other states would envy.

Fourth place was a tie between Idaho and Montana. For Idaho, June’s ranking was an improvement from its number seven position in May. Montana moved up from fifth place in May based on revised data (it had previously been in fourth place). Maryland, with a construction and mining unemployment rate,  took over Montana’s fourth place in May based on revised data (originally reported as number five) but fell to tenth place in June in a tie with Utah, which also held tenth place in May.

The Bottom Five States

The five states with the highest construction unemployment rates (from lowest to highest) were:

  1. New Mexico
  2. Rhode Island
  3. Georgia and West Virginia (tie)
  4. Mississippi

Three of the states with the five highest construction unemployment rates in May were among the five highest in June: Georgia, Mississippi and Rhode Island. For the second month in a row, Mississippi had the highest rate in the nation. On the positive side, the estimated construction unemployment rate for all 50 states fell below 10 percent for the first time since October 2014.

Georgia and West Virginia were tied for second highest in June. Georgia also had the second highest rate in May based on revised data (originally reported as third highest). West Virginia moved from tied with Connecticut and Missouri for eleventh highest in May to its tie with Georgia for second highest rate in June. West Virginia was one of five states with a year-over-year increase in their estimated construction unemployment rates and one of 12 states with an increase from their May rate. Among those 12 states, West Virginia along with New Hampshire had the largest monthly increase—1.6 percent.

Rhode Island moved from fifth highest in May based on revised data (originally reported as sixth highest) to fourth highest in June. New Mexico took Rhode Island’s fifth place position in June moving down from 17th highest in May.

New Jersey and South Carolina, which tied for third highest in May based on revised data, were sixth and seventh highest, respectively, in June. Alabama and California tied with South Carolina for seventh highest in June. In May, California’s construction unemployment rate was also seventh highest, while Alabama’s rate was sixth highest based on revised data (originally reported as fifth highest).

State_RankingRead more on ABC’s website.

Background

Associated Builders and Contractors (ABC) launched its state-by-state economic analysis earlier this year with the release of economist Bernard M. Markstein’s analysis of construction’s contribution to each state’s gross domestic product (GDP). ABC will be releasing Markstein’s next analysis of GDP data August 11, 2015

Unique to ABC, Markstein’s state-level construction unemployment estimate and analysis of state-level construction job markets for June is below. This analysis is produced monthy in addition to ABC’s existing national economic data and analysis. Background on how the data was derived and Markstein’s methodology is available on ABC’s website. 

TRIP: New Report Identifies U.S. Urban Areas With Roughest Roads And Highest Costs To Drivers – As Much As $1,044 Annually. As Travel Growth Returns To Pre-Recession Rates, Road Conditions Expected To Decline Further Without Additional Funding At Local, State & Federal Levels.

TRIPDriving on deteriorated urban roads costs motorists as much as $1,044 annually, according to a new report that evaluates pavement conditions in the nation’s large (500,000+ population) and mid-sized urban areas (250,000-500,000 population) and calculates the additional costs passed on to motorists as a result of driving on rough roads. Driving on roads in disrepair increases consumer costs by accelerating vehicle deterioration and depreciation, and increasing needed maintenance, fuel consumption and tire wear.

 

Driving on deteriorated urban roads costs motorists as much as $1,044 annually, according to a new report that evaluates pavement conditions in the nation’s large (500,000+ population) and mid-sized urban areas (250,000-500,000 population) and calculates the additional costs passed on to motorists as a result of driving on rough roads. Driving on roads in disrepair increases consumer costs by accelerating vehicle deterioration and depreciation, and increasing needed maintenance, fuel consumption and tire wear.

These findings were released today by TRIP, a national transportation research group based in Washington, D.C. The report, Bumpy Roads Ahead: America’s Roughest Rides and Strategies to Make our Roads Smoother,” examines urban pavement conditions, transportation funding, travel trends and economic development. Pavement condition and vehicle operating costs for urban areas with populations of 250,000 or greater can be found in the report and appendices. The charts below detail large and mid-sized urban areas with the highest vehicle operating costs (VOC) and highest share of pavements in poor conditions.

Rank  

Large Urban Area (500,000+ population)

Percent Poor Rank Large Urban Area (500,000+ population) VOC Per Driver
1 San Francisco–Oakland, CA 74% 1 San Francisco-Oakland, CA $ 1,044
2 Los Angeles–Long Beach–Santa Ana, CA 73% 2 Los Angeles–Long Beach–Santa Ana, CA $ 1,031
3 Concord, CA 62%   3 Concord, CA $     954
4 Detroit, MI 56% 4 Tulsa, OK $     928
5 San Jose, CA 53% 5 Oklahoma City, OK $     917
6 Cleveland, OH 52% 6 Detroit, MI $     866
7 New York–Newark, NY 51% 7 Cleveland, OH $     845
8 San Diego, CA 51% 8 San Jose, CA $     844
9 Grand Rapids, MI 51% 9 San Diego, CA $     843
10 Honolulu, HI 51% 10 San Antonio, TX $     838
11 Akron, OH 50% 11 El Paso, TX $     815
12 San Antonio, TX 49% 12 Riverside–San Bernardino, CA $     812
13 Milwaukee, WI 46% 13 Grand Rapids, MI $     803
14 Riverside–San Bernardino, CA 46% 14 Akron, OH $     797
15 El Paso, TX 46% 15 New York–Newark, NY $     791
16 Oklahoma City, OK 45% 16 Dallas–Fort Worth–Arlington, TX $     791
17 Tulsa, OK 45% 17 Birmingham, AL $     784
18 New Haven, CT 45% 18 Honolulu, HI $     777
19 Bridgeport-Stamford, CT 44% 19 Houston, TX $     772
20 Birmingham, AL 43% 20 Sacramento, CA $     767
21 Denver–Aurora, CO 43% 21 Milwaukee, WI $     753
22 Seattle, WA 42% 22 Denver–Aurora, CO $     737
23 Omaha, NE 42% 23 Omaha, NE $     729
24 Sacramento, CA 42% 24 Colorado Springs, CO $     723
25 New Orleans, LA 42% 25 New Orleans, LA $     713

 

Rank Mid-sized Urban Area

(250,000-500,000 population)

Percent Poor Rank Mid-sized Urban Area

(250,000-500,000 population)

VOC Per Driver
1 Flint, MI 54% 1 Temecula–Murrieta, CA $ 857
2 Antioch, CA 52% 2 Flint, MI $ 839
3 Santa Rosa, CA 49% 3 Antioch, CA $ 831
4 Trenton, NJ 48% 4 Jackson, MS $ 818
5 Temecula–Murrieta, CA 47% 5 Santa Rosa, CA $ 811
6 Scranton, PA 46% 6 Trenton, NJ $ 764
7 Reno, NV 46% 7 Hemet, CA $ 758
8 Spokane, WA 44% 8 Reno, NV $ 748
9 Jackson, MS 44% 9 Lansing, MI $ 733
10 Lansing, MI 39% 10 Scranton, PA $ 717
11 Baton Rouge, LA 38% 11 McAllen, TX $ 716
12 Shreveport, LA 36% 12 Baton Rouge, LA $ 705
13 Madison, WI 36% 13 Spokane, WA $ 685
14 Hemet, CA 36% 14 Madison, WI $ 685
15 Stockton, CA 34% 15 Oxnard, CA $ 669
16 McAllen, TX 33% 16 Victorville–Hesperia–Apple Valley, CA $ 664
17 Victorville-Hesperia-Apple Valley, CA 32% 17 Shreveport, LA $ 663
18 Davenport, IA 31% 18 Stockton, CA $ 657
19 Syracuse, NY 30% 19 Modesto, CA $ 636
20 Modesto, CA 30% 20 Davenport, IA $ 591
21 Oxnard, CA 30% 21 Wichita, KS $ 591
22 Provo–Orem, UT 30% 22 Provo–Orem, UT $ 583
23 Lancaster, PA 27% 23 Ann Arbor, MI $ 571
24 Fort Wayne, IN 27% 24 Reading, PA $ 555
25 Ann Arbor, MI 26% 25 Corpus Christi, TX $ 549

In 2013 more than one quarter (28 percent) of the nation’s major urban roads– Interstates, freeways and other arterial routes – had pavements that were in substandard condition and provided an unacceptably rough ride to motorists, costing the average urban driver $516 annually. The nationwide annual cost of driving on deteriorated roads totals $109.3 billion.

In 2013 more than one quarter (28 percent) of the nation’s major urban roads– Interstates, freeways and other arterial routes – had pavements that were in substandard condition and provided an unacceptably rough ride to motorists, costing the average urban driver $516 annually. The nationwide annual cost of driving on deteriorated roads totals $109.3 billion.

“The nation’s rough roads stress nerves and cost billions in unnecessary vehicle replacement, repair and fuel costs,” said Jill Ingrassia, AAA managing director of government relations and traffic safety advocacy. “Full investment in our nation’s transportation system will reduce the financial burden on drivers and provide them with a smoother, safer and more efficient ride.”

The federal government is a critical source of funding for road and highway repairs. But the lack of adequate funding beyond the expiration of the current federal surface transportation program, MAP-21 (Moving Ahead for Progress in the 21st Century Act), which expires on July 31, 2015, threatens the future condition of the nation’s roads and highways.

“The long-term preservation and maintenance of our national transportation system depends on federal investment,” said Bud Wright, executive director of the American Association of State Highway and Transportation Officials (AASHTO). “We can do better than the uncertainty of short-term extensions. America needs Congress to fully fund a multi-year surface transportation bill.”

With vehicle travel growth rates returning to pre-recession levels and large truck travel anticipated to grow significantly, mounting wear and tear on the nation’s urban roads and highways is expected to increase the cost of needed highway repairs. Vehicle travel, which remained largely unchanged from 2008 to 2013, increased by 1.7 percent from 2013 to 2014 and increased 3.9 percent during the first four months of 2015 compared to the same period in 2014. And, the amount of large commercial truck travel in the U.S. is expected to increase by 72 percent from 2015 to 2030.

“The deteriorating condition of our nation’s urban roads threatens the health of the nation’s economy, reducing the efficiency of a region’s businesses and employers,” said Janet Kavinoky, Executive Director, Transportation and Infrastructure, U.S. Chamber of Commerce and vice president of the Americans for Transportation Mobility (ATM) Coalition. “Attracting jobs and expanding a region’s economy requires a well-maintained, efficient and safe transportation system. Funding needed transportation improvements must be a top priority at the federal, state and local levels and Congress must do its part by authorizing an adequately funded, long-term federal transportation bill.”

“With state and local governments struggling to fund needed road repairs and with federal surface transportation funding set to expire this month, road conditions are projected to get even worse,” said Will Wilkins, TRIP’s executive director. “Congress could reduce the extra costs borne by motorists driving on rough roads by authorizing a long-term, adequately funded federal transportation program that improves road conditions on the nation’s major roads and highways.”

Bumpy Roads Ahead:

America’s Roughest Rides and Strategies to Make our Roads Smoother

Executive Summary

Keeping the wheel steady on America’s roads and highways has become increasingly challenging as drivers encounter potholes and pavement deterioration. More than a quarter of the nation’s major urban roadways – highways and major streets that are the main routes for commuters and commerce – are in poor condition. These critical links in the nation’s transportation system carry 53 percent of the approximately 3 trillion miles driven annually in America.

With the rate of vehicle travel returning to pre-recession levels and local and state governments unable to adequately fund road repairs while the current federal surface transportation program is set to expire on July 31, 2015, road conditions could get even worse in the future.

In this report, TRIP examines the condition of the nation’s major urban roads, including pavement condition data for America’s most populous urban areas, recent trends in travel, the latest developments in repairing roads and building them to last longer, and the funding levels needed to adequately address America’s deteriorated roadways.

For the purposes of this report, an urban area includes the major city in a region and its neighboring or surrounding suburban areas. Pavement condition data are the latest available and are derived from the Federal Highway Administration’s (FHWA) 2013 annual survey of state transportation officials on the condition of major state and locally maintained roads and highways, based on a uniform pavement rating index. The pavement rating index measures the level of smoothness of pavement surfaces, supplying information on the ride quality provided by road and highway surfaces. The major findings of the TRIP report are:

More than a quarter of the nation’s major urban roads are rated in substandard or poor condition, providing motorists and truckers with a rough ride and increasing the cost of operating a vehicle.

  • More than one-quarter (28 percent) of the nation’s major urban roads – Interstates, freeways and other arterial routes – have pavements that are in substandard condition and provide an unacceptably rough ride to motorists.
  • An additional 41 percent of the nation’s major urban roads and highways have pavements that are in mediocre or fair condition, and 31 percent are in good condition.
  • Including major rural roads, 18 percent of the nation’s major roads are in poor condition, 40 percent are in mediocre or fair condition, and 42 percent are in good condition.
  • The 25 urban regions with a population of 500,000 or greater with the highest share of major roads and highways with pavements that are in poor condition and provide a rough ride are:

TRIP 1* An urban area includes the major city in a region and its neighboring or surrounding suburban areas.

  • The 25 urban regions with a population between 250,000 and 500,000 with the greatest share of major roads and highways with pavements that are in poor condition and provide a rough ride are:

TRIP 2* An urban area includes the major city in a region and its neighboring or surrounding suburban areas.

  • A listing of road conditions for each urban area with a population of 500,000 or more can be found in Appendix A. Pavement condition data for urban areas with a population between 250,000 and 500,000 can be found in Appendix B.
  • The average motorist in the U.S. is losing $516 annually — $109.3 billion nationally — in additional vehicle operating costs as a result of driving on roads in need of repair. Driving on roads in disrepair increases consumer costs by accelerating vehicle deterioration and depreciation, increasing the frequency of needed maintenance and requiring additional fuel consumption.
  • The 25 urban regions with at least 500,000 people, where motorists pay the most annually in additional vehicle maintenance because of roads in poor condition are:

TRIP3* An urban area includes the major city in a region and its neighboring or surrounding suburban areas.

  • The 25 urban regions with a population between 250,000 and 500,000 where motorists pay the most annually in additional vehicle maintenance because of roads in poor condition are:

TRIP4* An urban area includes the major city in a region and its neighboring or surrounding suburban areas.

 

  • A listing of additional vehicle operating costs due to driving on roads in substandard condition for urban areas with populations over 500,000 can be found in Appendix C. Additional vehicle operating costs for urban areas with a population between 250,000 and 500,000 can be found in Appendix D.

With vehicle travel growth returning to pre-recession rates and large truck travel anticipated to grow significantly, resulting in increased traffic and wear and tear on the nation’s urban roads and highways, the additional travel will increase the amount of road, highway and bridge investment which will be needed to improve conditions and to meet the nation’s transportation needs.    

  • Vehicle travel increased by 39 percent from 1990 to 2008. From 2008 to 2013, the amount of vehicle travel on the nation’s roadways remained largely unchanged, increasing by one half percent during the five year period.
  • Vehicle travel in the U.S. increased by 1.7 percent from 2013 to 2014. U.S. vehicle travel during the first four months of 2015 increased 3.9 percent from the same period in 2014.
  • Travel by large commercial trucks in the U.S. increased by 79 percent from 1990 to 2013. Large trucks place significant stress on roads and highways.
  • The level of heavy truck travel nationally is anticipated to increase by approximately 72 percent from 2015 to 2030, putting greater stress on the nation’s roadways.
  • The 2015 AASHTO Transportation Bottom Line Report found that the U.S. currently has a $740 billion backlog in improvements needed to restore the nation’s roads, highways and bridges to the level of condition and performance needed to meet the nation’s transportation demands.
  • The 2015 AASHTO Transportation Bottom Line Report found that the nation’s road, highway and bridge backlog included $392 billion in needed road and highway repairs to return them to a state of good repair; $112 billion needed in bridge rehabilitation and $237 billion in needed highway capacity expansions to relieve traffic congestion and support economic development.
  • The 2015 AASHTO Transportation Bottom Line Report also found that the annual needed investment in the nation’s roads, highways and bridges to improve their condition and to meet the nation’s transportation needs is $120 billion, assuming that vehicle travel increases at a rate of one percent per year. This level of investment is 36 percent higher than the current annual spending of $88 billion.
  • The 2015 AASHTO Transportation Bottom Line Report found that if the rate of vehicle travel increased by 1.4 percent per year that the needed annual investment in the nation’s roads, highways and bridges would increase to $144 billion and if vehicle travel grows by 1.6 percent annually the needed annual investment in the nation’s roads, highways and bridges would be $156 billion.

The federal government is a critical source of funding for road and highway repairs. But the lack of adequate funding beyond the expiration of the current federal surface transportation program, MAP-21 (Moving Ahead for Progress in the 21st Century Act), which expires on July 31, 2015, threatens the future condition of the nation’s roads and highways.      

Projects to improve the condition of the nation’s roads and bridges could boost the nation’s economic growth by providing significant short- and long-term economic benefits. 

  • Highway rehabilitation and preservation projects provide significant economic benefits by improving travel speeds, capacity and safety, and by reducing operating costs for people and businesses.   Roadway repairs also extend the service life of a road, highway or bridge, which saves money by postponing the need for more expensive future repairs.
  • The Federal Highway Administration estimates that each dollar spent on road, highway and bridge improvements results in an average benefit of $5.20 in the form of reduced vehicle maintenance costs, reduced delays, reduced fuel consumption, improved safety, reduced road and bridge maintenance costs and reduced emissions as a result of improved traffic flow.

Transportation agencies can reduce pavement life cycle costs by using higher-quality paving materials that keep roads structurally sound and smooth for longer periods, and by employing a pavement preservation approach that optimizes the timing of repairs to pavement surfaces.

  • There are five life-cycle stages of a roadway pavement: design, construction, initial deterioration, visible deterioration and pavement disintegration and failure.
  • A 2010 Federal Highway Administration report found that an over-reliance on short-term pavement repairs will fail to provide the long-term structural integrity needed in a roadway surface to guarantee the future performance of a paved road or highway.
  • The 2010 Federal Highway Administration report warned that transportation agencies that focus only on current pavement surface conditions will eventually face a highway network with an overwhelming backlog of pavement rehabilitation and replacement needs.
  • A properly implemented pavement preservation approach to keeping pavements in good condition has been found to reduce overall pavement life cycle costs by approximately one-third over a 25-year period.
  • Initial pavement preservation can only be done on road surfaces that are structurally sound. Roads that have significant deterioration must be maintained with surface repairs until sufficient funds are available to reconstruct the road, at which time a pavement preservation strategy can be adopted.
  • The use of thicker pavements and more durable designs and materials for a particular roadway are being used to increase the life span of road and highway surfaces and delay the need for significant repairs. These new pavements include high performance concrete pavements and asphalt pavements which have a perpetual pavement design.

Adequate funding allows transportation agencies to reconstruct roadways that are structurally worn out and adopt the following recommendations for insuring a smooth ride.

  • Implement and adequately fund a pavement preservation program that performs initial maintenance on road surfaces while they are still in good condition, postponing the need for significant rehabilitation.
  • Use pavement materials and designs that will provide a longer-lasting surface when critical routes are constructed or reconstructed.
  • Resurface roads in a timely fashion using pavement materials that are designed to be the most durable, given local climate and the level and mix of traffic on the road.
  • Invest adequately to ensure that 75 percent of local road surfaces are in good condition.

All data used in the report are the latest available. Sources of information for this report include the Federal Highway Administration (FHWA), the United States Department of Transportation (USDOT), the AAA, the Texas Transportation Institute, the Transportation Research Board and the Bureau of Labor Statistics.