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TRIP: U.S. RURAL ROADS & BRIDGES HAVE SIGNIFICANT DEFICIENCIES & HIGH FATALITY RATES; REPAIRS & MODERNIZATION NEEDED TO IMPROVE CONDITIONS, BOOST SAFETY & SUPPORT GROWTH & CONNECTIVITY

America’s rural transportation system is in need of repairs and modernization to support economic growth in the nation’s Heartland, which is a critical source of energy, food, and fiber. With increases in population and growing employment, rural America is heavily reliant on the quality of its transportation system to sustain further growth. This is according to a new report released today by TRIP, a national transportation research nonprofit. The report, Rural Connections: Challenges and Opportunities in America’s Heartland, evaluates the safety and condition of the nation’s rural roads and bridges and finds that the nation’s rural transportation system is in need of immediate improvements to address deficient roads and bridges, high crash rates, and inadequate connectivity and capacity. The chart below shows the states with the highest rate of rural pavements in poor condition, states with the highest share of rural bridges that are rated poor/structurally deficient, and states with the highest fatality rates on non-Interstate, rural roads.

The report finds that the nation’s rural roads and bridges have significant deficiencies. Fifteen percent of U.S. rural roads are rated in poor condition, while 21 percent are in mediocre condition. Seventeen percent of the nation’s rural roads are in fair condition and the remaining 47 percent are in good condition. Nine percent of the nation’s rural bridges are rated in poor/structurally deficient condition, meaning there is significant deterioration to the major components of the bridge. Poor/structurally deficient bridges are often posted for lower weight or closed to traffic, restricting or redirecting large vehicles, including agricultural equipment, commercial trucks, school buses and emergency services vehicles.  Forty-six percent of rural bridges are rated fair.  A fair rating indicates that a bridge’s structural elements are sound but minor deterioration has occurred to the bridge’s deck, substructure or superstructure.

“Farmers and ranchers depend on rural roads, highways and bridges for daily life and to move their products to market,” said Zippy Duvall, president of the American Farm Bureau Federation. “Securing the appropriate resources at the local, state and federal levels will allow for the improvements needed to provide a rural transportation system that will keep goods moving, American agriculture competitive and rural Americans safe.”

In addition to deteriorated roads and bridges, the TRIP report finds that traffic crashes and fatalities on rural non-Interstate roads are disproportionately high, occurring at a rate nearly two-and-a-half times higher than on all other roads. In 2017, non-Interstate rural roads had a traffic fatality rate of 2.14 deaths for every 100 million vehicle miles of travel, compared to a fatality rate on all other roads of 0.88 deaths per 100 million vehicle miles of travel. Rural roads are more likely to have narrow lanes, limited shoulders, sharp curves, exposed hazards, pavement drop-offs, steep slopes and limited clear zones along roadsides.

“This report highlights again the critical need for federal action to modernize our nation’s infrastructure,” said Ed Mortimer, vice president of transportation infrastructure of the U.S. Chamber of Commerce.  “We have a historic opportunity to address many rural infrastructure needs with President Trump and Congress discussing a major infrastructure bill. Let’s hope they act to address this critical issue!”

The TRIP report found that America’s rural population, which had declined slightly from 2010 to 2016, increased in 2017, adding an additional 33,000 people.  The modest rebound in rural population is likely a result of increased employment and declining poverty, the report found.  The number of jobs in rural America increased by 370,000 from 2013 to 2017 and the rural unemployment rate has decreased steadily from 10.3 percent in 2010 to 4.4 percent in 2017.  The rural poverty rate, which is the percentage of people who are making below the amount of money deemed necessary to have a basic standard of living, has decreased from 18.4 percent in 2013 to 16.4 percent in 2017, the TRIP report noted.

America’s rural transportation system provides the first and last link in the supply chain from farm to market connects manufacturers to their customers, supports the tourism industry, and enables the production of energy, food, and fiber. Rural Americans are more reliant on the quality of their transportation system than their urban counterparts.

“Rural roads play a critical role in supporting the transportation needs of millions of Americans every day,” said Kathleen Bower, AAA senior vice president of public affairs and international relations. “Damaged and deteriorating roadways too often result in deadly crashes, and it is time to act. Making critical safety improvements to rural roads will save thousands of lives each year and help move our economy forward.”

The TRIP report finds that the U.S. needs to implement transportation improvements that will improve rural transportation connectivity, safety and conditions to provide the nation’s small communities and rural areas with safe and efficient access to support the quality of life and enhance economic productivity.

“The health of the nation’s economy and the safety and quality of life in America’s small communities and rural areas ride on our rural transportation system. Our rural roads and bridges provide crucial links from farm to market, move manufactured and energy products, and provide access to countless tourism, social and recreational destinations,” said Will Wilkins, executive director of TRIP.  “Fixing the federal Highway Trust Fund with a long-term, sustainable source of revenue that supports the transportation investment needed will be crucial to the modernization of our rural transportation system.”

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Executive Summary

America’s rural heartland plays a vital role as home to a significant share of the nation’s population, many of its natural resources, and popular tourist destinations. It is also the primary source of the energy, food, and fiber that supports America’s economy and way of life. The strength of the nation’s rural economy is heavily reliant on the quality of its transportation system, particularly the roads and highways that link rural America with the rest of the U.S. and to markets in other countries. The quality and connectivity of America’s rural transportation system support the economy of the entire nation and quality of life for the approximately 60 million Americans living in rural areas.

Good transportation is essential in rural areas to provide access to jobs, to facilitate the movement of goods and people, to access opportunities for health care and educational skills, and to provide links to other social services. Transportation supports businesses and is a critical factor in a company’s decision to locate new business operations. For communities that rely on tourism and natural amenities to help support their economy, transportation is the key link between visitors and destinations.

Roads, highways, rails, and bridges in the nation’s heartland face a number of significant challenges: they lack adequate capacity; they fail to provide needed levels of connectivity to many communities; and, they cannot adequately support growing freight travel in many corridors. Rural roads and bridges have significant deficiencies and deterioration, they lack many desirable safety features, and they experience fatal traffic crashes at a rate far higher than all other roads and highways. This report looks at the condition, use and safety of the nation’s rural transportation system, particularly its roads, highways and bridges, and identifies needed improvements.

Rural areas in this report are based on the U.S. Census Bureau definition, which defines rural areas as regions outside of urban areas with a population of 2,500 or more.  Road, bridge and safety data in this report is based on the Federal Highway Administration (FHWA) definition for rural areas, which allows states to use the U.S. Census Bureau definition to identify rural routes or to define rural areas as regions outside of urban areas with a population of 5,000 or more. The following are the key findings of the report.

AMERICA’S RURAL HEARTLAND

Rural America is the primary source of energy, food, and fiber that drives the U.S. economy.  The decline in the rural population has been halted largely due to increasing employment and declining poverty. 

  • The U.S. Census Bureau defines rural areas as regions outside of urban areas with a population of 2,500 or more.
  • According to the U.S. Census Bureau definition, 19 percent of the nation’s residents live in rural areas – approximately 60 million people.
  • The nation’s rural areas account for 97 percent of America’s land area and are home to the vast majority of the nation’s 2.2 million farms.
  • America’s rural population, which had declined slightly from 2010 to 2016, increased in 2017, adding an additional 33,000 people.  The modest rebound in rural population is likely a result of increased employment and declining poverty.
  • The number of jobs in rural America increased by 370,000 from 2013 to 2017, and the rural unemployment rate has decreased steadily from 10.3 percent in 2010 to 4.4 percent in 2017.
  • The rural poverty rate, which is the percentage of people making below the amount of money deemed necessary to have a basic standard of living, has decreased from 18.4 percent in 2013 to 16.4 percent in 2017.
  • America’s rural economy is far more reliant on goods production, which includes farming, forestry, fishing, mining and energy extraction, and manufacturing that is the nation’s urban economy.
  • Many of the transportation challenges facing rural America are similar to those in urbanized areas. However, rural residents tend to be more heavily reliant on their limited transportation network – primarily rural roads and highways – than their counterparts in urban areas. Residents of rural areas often must travel long distances to access education, employment, retail locations, social opportunities, and health services.
  • Nineteen percent of the rural population is 65 years or older, compared to 15 percent in urban areas.
  • The movement of retiring baby boomers to rural America is likely to continue in the future as aging Americans seek out communities that offer affordable housing, small-town quality of life and desirable natural amenities, while often located within a short drive of larger metropolitan areas.
  • The amount of rural tourism in a region is tied partly to the level of highway access. Eighty-six percent of trips taken by Americans to visit rural areas are for leisure purposes.
  • Popular tourist activities in rural America include hiking, golfing, biking, hunting, fishing and water sports. Rural areas are also home to beaches, national and state parks, wineries, orchards, and other national amenities.

RURAL QUALITY OF LIFE AND ECONOMIC VITALITY RELY ON TRANSPORTATION

The quality of life in America’s small communities and rural areas, and the health of the nation’s rural economy is highly reliant on the quality of the nation’s transportation system, particularly its roads, highways, and bridges. America’s rural transportation network provides the first and last link in the supply chain from farm to market while supporting the tourism industry and enabling the production of energy, food, and fiber.

  • Freight mobility and efficiency are fundamental to rural economic vitality and prosperity. Economic growth and stability in rural areas are heavily reliant on the ability to move raw materials into, or the value-added products out of, these areas.
  • Agriculture, food, and related industries, including food and beverage manufacturing, apparel manufacturing and food and beverage stores and establishments — which rely on agricultural inputs — contributed $1.05 trillion to the U.S. gross domestic product (GDP) in 2016. This represents 5.7 percent of overall U.S. GDP.
  • While farming accounts for just six percent of all jobs in rural America, for every person employed in farming there are seven more jobs in agribusiness, including wholesale and retail trade, processing, marketing, production, and distribution.
  • Employment in goods production, which includes farming, forestry, fishing, mining and energy extraction, accounts for 11 percent of earnings in the nation’s rural economy versus two percent in the urban economy.
  • Manufacturing jobs account for 15 percent of earnings in the nation’s rural economy versus nine percent in the urban economy.
  • A United States Department of Agriculture(USDA) report found that “an effective transportation system supports rural economies, reducing the prices farmers pay for inputs such as seeds and fertilizers, raising the value of their crops and greatly increasing market access.”
  • Trucks provide the majority of transportation for agricultural products, accounting for 47 percent of total ton-miles of travel compared to 37 percent by rail and eight percent by barge.
  • The Council of State Governments found that “rural highways provide many benefits to the nation’s transportation system, including serving as a bridge to other states, supporting the agriculture and energy industries, connecting economically challenged citizens in remote locations to employers, enabling the movement of people and freight, and providing access to America’s tourist attractions.”
  • Transportation is becoming an even more critical segment of the food distribution network. While food demand is concentrated mostly in urban areas, food distribution is the most dispersed segment of the economy.
  • A highly competitive and efficient transportation system can lead to lower food costs for U.S. consumers and higher market prices for producers due to lower shipping costs, smaller margins, and more competitive export prices.
  • A report by the Pacific Economic Cooperation Council recommends that governments improve the quality of their transportation systems serving the movement of goods from rural to urban regions as a strategy to lower food costs and increase economic prosperity.
  • A report on agricultural transportation by the USDA found it likely that market changes and shifts in consumer preferences would further increase the reliance on trucking to move U.S. agricultural products.

RURAL CONNECTIONS TO TOURISM AND RECREATION

The condition and quality of the nation’s highway system plays a critical role in providing access to America’s many tourist destinations, particularly its scenic parks and recreational areas, which are mostly located in rural areas.

  • America’s 418 national parks, which are largely located in rural areas, received a record 318 million visitors in 2018, many in personal vehicles.
  • In 2018, domestic and international travelers in the U.S. spent approximately $1.1 trillion.
  • Travel and tourism spending in the U.S. in 2018 supported 8.9 million jobs.

RURAL ACCESS TO ENERGY SOURCES

Travel loads on America’s rural roads are increasing, due partly to the booming energy extraction sector. This has been driven by increases in domestic oil and gas extraction, largely as a result of advancements in hydraulic fracturing (fracking), which has greatly increased the accessibility of shale oil and gas deposits, and the increased production of renewable energy such as wind and solar.

  • Ethanol production in the U.S. increased from 1.6 billion gallons in 2000 to 16.1 billion gallons in 2018.
  • U.S. production of liquid fuels, including crude oil and natural gas, increased 74 percent from 2000 to 2018, increasing liquid fuel’s share of overall U.S. energy production (including coal and nuclear) from 48 to 63 percent.
  • U.S. production of renewable energy, including wind and solar, increased 92 percent from 2000 to 2018, increasing renewable energy’s share of overall U.S. energy production from nine to 12 percent.
  • The development of significant new oil and gas fields in numerous areas, particularly in the North Central Plains, and increased agricultural production are placing increased traffic loads by large trucks on non-Interstate rural roads, which often have not been constructed to carry such high load volumes.
  • The average travel per-lane-mile by large trucks on rural Interstate highways in the U.S. increased by 33 percent from 2000 to 2017.

RURAL TRANSPORTATION CHALLENGE: CONNECTIVITY

The potential for additional economic growth in many rural areas is being impeded by the failure to significantly modernize the nation’s rural transportation system and provide for adequate connectivity.

  • Sixty-six U.S. cities with a population of 50,000 or more do not have direct access to the Interstate Highway System (Appendix A).
  • Rural transportation accessibility and connectivity are critical to transportation-dependent business sectors, including the growing energy production sector, advanced manufacturing and tourism. Many jobs located in urban areas also depend on economic input from rural communities.
  • Since the routes for the Interstate Highway System were designated in 1956, the nation’s population has nearly doubled, from 165 million to 327 million.
  • The abandonment of more than 100,000 miles of rail lines in recent decades, mostly in rural areas, has reduced access in many rural communities and increased reliance on trucking for freight movement.
  • A report by the American Association of State Highway and Transportation Officials(AASHTO) found that connectivity is particularly poor in rural portions of Western states because of the significant distance between Interstate highway routes and the lack of adequate rail service.
  • Only 60 percent of rural counties nationwide have public transportation available. Twenty-eight percent of those have very limited service.
  • Residents of rural areas often must travel long distances to access education, employment, retail locations, social opportunities, and health services. Rural residents also assume additional risks as a result of living in areas that may be farther from emergency response services including police, fire or medical assistance.

RURAL TRANSPORTATION CHALLENGE: SAFETY

Traffic fatalities on the nation’s rural, non-Interstate roads occur at a rate approximately two-and-a-half times higher than on all other roads. A disproportionate share of fatalities takes place on rural roads compared to the amount of traffic they carry.

  • Rural, non-Interstate roads have a traffic fatality rate that is nearly two-and-a-half times higher than all other roads. In 2017, non-Interstate rural roads had a traffic fatality rate of 2.14 deaths for every 100 million vehicle miles of travel (VMT), compared to a fatality rate of 0.88 deaths per 100 million VMT on all other roads.
  • Rural, non-Interstate routes accounted for 22 percent of all VMT in the U.S. in 2017. However, crashes on the nation’s rural, non-Interstate routes resulted in 41 percent (15,205 of 37,133) of the nation’s traffic deaths in 2017.
  • The chart below identifies the 25 states that led the nation in the number of rural non-Interstate traffic deaths in 2017. Data for all states is available in Appendix B.

  • The chart below identifies the 25 states with the highest rate of rural non-Interstate traffic fatalities per 100 million VMT, and the fatality rate per 100 million VMT on all other roads in the state in 2017. Data for all states is available in Appendix C.

The higher traffic fatality rate found on rural non-Interstate routes is a result of multiple factors, including a lack of desirable roadway safety features, longer emergency vehicle response times, and the higher speeds traveled on rural roads compared to urban roads.

  • Rural roads are more likely than urban roads to have roadway features that reduce safety, including narrow lanes, limited shoulders, sharp curves, exposed hazards, pavement drop-offs, steep slopes and limited clear zones along roadsides.
  • Because many rural routes have been constructed over a period of years, they often have inconsistent design features for such things as lane widths, curves, shoulders and clearance zones along roadsides.
  • Rural roads are more likely than urban roads to be two-lane routes. Eighty-six percent of the nation’s rural non-freeway arterial roads have two-lanes, compared to 56 percent of urban non-freeway arterial routes.
  • Rural roads are more likely than urban roads to have narrow lanes. A desirable lane width for collector and arterial roadways is at least 11 feet. Twenty-three percent of rural collector and arterial roads have lane widths of 10 feet or less, compared to 18 percent of urban collector and arterial roads.
  • Most head-on crashes on rural, non-Interstate roads are likely caused by a motorist making an unintentional maneuver as a result of driver fatigue, being distracted or driving too fast in a curve.
  • While driver behavior is a significant factor in traffic crash rates, both safety belt usage and impaired driving rates are similar in their involvement rate as a factor in urban and rural traffic crashes.

Many roadway safety improvements can be made to reduce serious crashes and traffic fatalities. These improvements are designed largely to keep vehicles from leaving the correct lane and to reduce the consequences of a vehicle leaving the roadway. Making needed roadway safety improvements would result in a significant reduction in traffic fatalities and serious injuries. 

  • The U.S. has a $146 billion backlog in needed roadway safety improvements, according to a 2017 report from the AAA Foundation for Traffic Safety. The report found implementing these cost-effective and needed roadway safety improvements on U.S. roadways would save approximately 63,700 lives and reduce the number of serious injuries as a result of traffic crashes by approximately 350,000 over 20 years.
  • The type of safety design improvements that are appropriate for a section of rural road will depend partly on the nature of the safety problem on that section of road and the amount of funding available.
  • Low-cost safety improvements include installing rumble strips along the centerline and sides of roads, improving signage and pavement/lane markings including higher levels of retroreflectivity, installing lighting, removing or shielding roadside obstacles, using chevrons and post-mounted delineators to indicate roadway alignment along curves, adding skid-resistant surfaces at curves, and upgrading or adding guardrails.
  • Moderate-cost improvements include adding turn lanes at intersections, resurfacing pavements and adding median barriers.
  • Moderate to high-cost improvements include improving roadway alignment, reducing the angle of curves, widening lanes, converting conventional intersections to roundabouts, adding or paving shoulders, adding intermittent passing lanes, or adding a third or fourth lane.
  • Systemic installation of cost-effective safety solutions and devices in rural areas helps to improve safety not just by targeting individual safety problem points on a road, but also making entire segments safer by improving those roadway segments that exhibit the characteristics that typically result in fatal or serious-injury crashes.

RURAL TRANSPORTATION CHALLENGES: DEFICIENT ROAD AND BRIDGE CONDITIONS

The nation’s rural roads, highways, and bridges have significant deficiencies and deterioration. Fourteen percent of the nation’s rural roads have pavements in poor condition, and nearly one-in-ten of the nation’s rural bridges need rehabilitation, repair or replacement.

  • In 2017, 15 percent of the nation’s major rural roads (arterials and collectors) were rated in poor condition, 21 percent were rated in mediocre condition, 17 percent were rated in fair condition and 47 percent were rated in good condition.
  • The chart below ranks the 25 states with the greatest percentage of rural roads in poor condition in 2017. Rural pavement conditions for all states can be found in Appendix D.

  • In 2018, nine percent of the nation’s rural bridges were rated as poor/structurally deficient. Forty-six percent of rural bridges were rated fair and forty-six percent of rural bridges were rated in good condition. A bridge is rated poor/structurally deficient if there is significant deterioration of the bridge deck, supports or other major components. Poor/structurally deficient bridges are often posted for lower weight or closed to traffic, restricting or redirecting large vehicles, including commercial trucks, agricultural equipment, school buses, and emergency services vehicles.  A fair rating indicates that a bridge’s structural elements are sound but minor deterioration has occurred to the bridge’s deck, substructure or superstructure.
  • The chart below ranks the 25 states with the highest share of rural bridges rated poor/structurally deficient in 2018. Rural bridge conditions for all states can be found in Appendix E.

TRANSPORTATION OPPORTUNITIES IN RURAL AMERICA

America must adopt transportation policies that improve rural transportation connectivity, safety and conditions to provide the nation’s small communities and rural areas with a level of safe and efficient access that will support the quality of life and enhance economic productivity. TRIP recommends the following for an improved rural transportation system, based partially on findings and recommendations made by AASHTO, the National Highway Cooperative Research Program (NCHRP), the Council of State Governments (CSG) and the Ports-to-Plains Alliance.

Improve access and connectivity in America’s small communities and rural areas

  • Widen and extend key highway routes, including Interstates, to increase connectivity to smaller and emerging communities to facilitate access to jobs, education, and healthcare, while improving access for agriculture, energy, manufacturing, forestry, tourism and other critical segments of the rural economy.
  • An NCHRP report found that the construction of an additional 30,000 lane miles of limited access highways, largely along existing corridors, is needed to address the nation’s need for increased rural connectivity.
  • Modernize major two-lane roads and highways so they can accommodate increased personal and commercial travel.
  • Improve public transit service in rural America to provide improved mobility for people without access to private vehicles.

Improve rural traffic safety

  • Adequately fund needed rural roadway safety improvements and provide enhanced enforcement, education and improved emergency response to reduce the rate of rural traffic fatalities.
  • Implement cost-effective roadway safety improvements, including rumble strips, shoulder improvements, lane widening, curve reductions, skid-resistant surfaces at curves, passing lanes, intersection improvements and improved signage, pavement markings and lighting, guardrails and barriers, and improved shielding of obstacles.

Improve the condition of rural roads, highways, and bridges

  • Adequately fund local and state transportation programs to ensure sufficient preservation of rural roads, highways, and bridges to maintain transportation service and accommodate large truck travel, which is needed to support the rural economy.

FEDERAL TRANSPORTATION FUNDING

America’s ability to address its rural transportation challenges would be greatly enhanced if Congress is able to provide a long-term, dedicated, user-based revenue stream capable of fully funding the federal surface transportation program.  The current five-year federal surface transportation program includes modest funding increases and provides states with greater funding certainty, but falls far short of providing the level of funding needed to meet the nation’s highway and transit needs.

  • The USDOT report found that the nation’s current $105 billion investment in roads, highways, and bridges by all levels of government should be increased by 35 percent to $142.5 billion annually to improve the conditions of roads, highways and bridges, relieve traffic congestion, and improve traffic safety.

 All data used in this report is the most current available. Sources of information for this report include: The Federal Highway Administration (FHWA), the National Highway Traffic Safety Administration (NHTSA), the National Cooperative Highway Research Program (NCHRP), the American Association of State Highway and Transportation Officials (AASHTO), the United States Department of Agriculture (USDA), the Council of State Governments (CSG) and the U.S. Census Bureau. 

ABC Reports: Nonresidential Construction Spending Remains Elevated in May, But Private Sector Falters

Nonresidential Construction Spending Remains Elevated in May, But Private Sector Falters, Says ABC
Nonresidential construction spending inched 0.1 percent higher on a monthly basis in May, according to an Associated Builders and Contractors analysis of U.S. Census Bureau data released today. Spending, which totaled $749 billion on a seasonally adjusted annual rate for the month, is up 3 percent from the same time last year.

Public nonresidential spending increased 0.6 percent for the month and 4.9 percent for the year, while the private sector contracted 0.3 percent for the month but increased 1.8 percent year-over-year. The dip in private sector is spending is largely attributable to a 2.3 percent decrease in manufacturing-related spending.

“The prediction has been that publicly financed construction spending would rise in America,” said ABC’s Chief Economist Anirban Basu. “The logic of this is rooted in two basic factors. The first is that the ongoing economic expansion, now in its 10th year, has steadily improved fiscal conditions in state and local government.  With more money to spend, more communities are empowered to deal with deferred maintenance and even to expand the capacity of certain key infrastructure, whether roads, mass transit, wastewater treatment plants or water systems.

“The other factor relates to a political cycle,” said Basu. “Increasingly, policymakers have been making the case—and much of the electorate seems convinced—that stepped-up infrastructure investment is needed. Accordingly, in recent years, 31 states have expanded their transportation funding, including 24 of them by raising state gas taxes. Not surprisingly, public construction spending is higher on month-over-month and year-over-year bases.

“What has been less clear is whether privately financed construction would continue to rise,” said Basu. “While the economy remains strong, a number of headwinds have formed, particularly concerns regarding tariffs and trade wars. Construction material prices have already begun to surge, in part because of trade disputes involving materials such as softwood lumber, steel, and aluminum. This increases project costs without offering developers and their financiers any offsetting commercial benefit.

“Moreover, fears of a full-blown trade war between the United States and NAFTA partners, the European Union and/or China have likely resulted in some businesses and investors adopting a wait-and-see attitude,” said Basu. “This helps explain the recent dip in construction spending related to manufacturing. With key interest rates, like the prime rate, also on the rise, the motivation to move forward with projects may be waning. Rising borrowing costs make it less likely that a project will satisfy a given investor’s hurdle rate. Rising labor costs contribute further to this calculus.

“The upshot is that contractors would likely be primary beneficiaries of a less precarious policymaking environment,” said Basu. “Businesses, markets, developers and financiers each prefer certainty. They also prefer input costs that aren’t surging. This strongly suggests that, while private construction spending should remain sturdy during the months ahead given healthy backlog and current economic momentum, the outlook for construction spending may be rather different in a few quarters.”

 

 

Visit ABC Construction Economics for the Construction Backlog Indicator, Construction Confidence Index and state unemployment reports, plus analysis of spending, employment, GDP and the Producer Price Index.

Associated Builders and Contractors (ABC) is a national construction industry trade association established in 1950 that represents more than 21,000 members. Founded on the merit shop philosophy, ABC and its 70 chapters help members develop people, win work and deliver that work safely, ethically and profitably for the betterment of the communities in which ABC and its members work. Visit abc.org

ABC Reports: Nonresidential Construction Spending Plummets in June, Driven by Public Sector

Nonresidential construction spending fell by 2 percent on a monthly basis in June 2017, totaling $697 billion on a seasonally adjusted, annualized basis according to an analysis of U.S. Census Bureau data released today by Associated Builders and Contractors. June represents the first month during which spending has dipped below the $700 billion per year threshold since January 2016.

June’s weak construction spending report can be largely attributed to the public sector. Public nonresidential construction spending fell 5.4 percent for the month and 9.5 percent for the year, and all twelve public subsectors decreased for the month. Private nonresidential spending remained largely unchanged, increasing by 0.1 percent for the month and 1.1 percent for the year. April and May nonresidential spending figures were revised downward by 1.1 percent 0.4 percent, respectively.

“Coming into the year, there were high hopes for infrastructure spending in America,” said ABC Chief Economist Anirban Basu. “The notion was that after many years of a lack of attention to public works, newfound energy coming from Washington, D.C., would spur confidence in federal funding among state and local transportation directors as well among others who purchase construction services. Instead, public construction spending is on the decline in America. Categories including public safety and flood control have experienced dwindling support for investment, translating into a nine percent decline in public construction spending over the past twelve months.

“On the other hand, several private segments continue to manifest strength in terms of demand for construction services,” said Basu. “At the head of the class are office construction, driven by a combination of job growth among certain office-space-using categories as well as lofty valuations, and communications, which is being driven largely by enormous demand for data center capacity.

“While there are certainly some parts of the nation experiencing significant levels of public construction, those areas have increasingly become the exception as opposed to the rule,” said Basu. “The more general and pervasive strength is in private segments. Based on recent readings of the architecture billings index and other key leading indicators, commercial contractors are likely to remain busy for the foreseeable future. The outlook for construction firms engaged in public work remains unclear.

Despite Lofty Backlog, Nonresidential Construction Spending Remains Stagnant in May, Says ABC

Nonresidential construction spending expanded by 0.3 percent on both a monthly and yearly basis in May and stands at $714.3 billion on a seasonally adjusted annualized basis, according to analysis of a report from the U.S. Census Bureau released today by Associated Builders and Contractors (ABC).

Private nonresidential construction spending fell to $433.6 billion in May, a decline of 0.7 percent. Private nonresidential construction is now at its 2017 nadir, though it is 0.8 percent higher than one year ago. Contrary to the prevailing trend, public nonresidential construction spending rose 1.9 percent in May on a monthly basis but remains 0.5 percent lower than in May 2016.

“Interpreting nonresidential construction spending data has become more challenging in recent months,” said ABC Chief Economist Anirban Basu. “Among the sources of perplexity is the fact that the nonresidential construction spending data do not align neatly with trends in other key data.

“For instance, backlog remains strong and has been rising, according to and other recent industry surveys,” said Basu. “Construction employment has also continued to expand, consistent with the notion that the average contractor has been getting busier.  Industry stakeholder confidence remains reasonably high, though many industry participants continue to express alarm regarding growing construction skills shortages. But this sense of industry recovery is barely apparent in the nonresidential construction spending data, which indicate that spending has hardly expanded in nominal terms over the past year and is actually down in real terms.

“The other apparent inconsistency comes from the shift in construction spending growth from the private sector to the public sector,” said Basu.  “In prior quarters, it was private segments that drove industry-wide growth, particularly office, communications, lodging, amusement/recreation and commercial segments.  However, there has been some weakening in a handful of private segments recently, despite anecdotal information and survey data indicating elevated real estate developer confidence, low interest rates and busier architects.

“In May, it was public spending that led the way, including in the highway and street category, which has generally been a source of enormous disappointment since the Fixing America’s Surface Transportation Act became law in late 2015.  Whether the recent uptick in public construction spending is part of an emerging sustained trend or simply statistical anomaly is not clear.  What is clear is that overall nonresidential construction spending growth appears to be stalling, with many prospective purchasers of construction services having apparently adopted a wait-and-see attitude.”

ABC Says, Public Nonresidential Construction Spending Rebounds; Overall Spending Unchanged in February

Nonresidential construction spending remained unchanged in February, according to analysis of U.S. Census Bureau data released today by Associated Builders and Contractors (ABC). The segment totaled $701.9 billion on a seasonally adjusted annualized rate for the month, marking the seventh consecutive month in which nonresidential spending sat above the $700 billion threshold.

Private nonresidential construction spending faltered in February, with six of the 11 subsectors experiencing a month-over-month spending decrease. The communication category experienced a particularly precipitous decline, falling 8.1 percent for the month. Public nonresidential spending increased for the first time since October of 2016.

“Today’s construction spending report essentially left the status quo unchanged,” said ABC Chief Economist Anirban Basu. “Recent ABC construction confidence surveys indicate roughly flat spending expected over the next six months. Today’s report was consistent with those expectations.

“Many construction firm leaders expect that ultimately, nonresidential construction spending will begin to climb as the new administration in Washington begins to implement its pro-business agenda,” said Basu. “That said, there is an awareness that the impact of proposed pro-business policies will not be immediate and may actually not be felt in earnest until 2018 or even 2019.

“Even in the absence of policy impacts, there has been a general improvement in overall business confidence in America,” said Basu. “This should translate into better construction spending performance over the months ahead, particularly in privately financed categories.”

February 2017 Nonresidential Construction Spending