Why aging infrastructure will cost the US economy dearly



A lot of time when we’re stuck in traffic or our internet is running slowly, it feels like a nuisance.  But it’s actually something much more serious: an obstacle to economic growth.  Last year, the American Society of Civil Engineers estimated that by 2020, “aging and unreliable” infrastructure will cost American businesses $1.2 trillion.

cost of infrastructure jobs

Market Realist – The graph above shows the estimated cost of degrading infrastructure in terms of jobs in various sectors for the years 2020 and 2040. Retail trade, construction, medical services and healthcare (XLV), and finance and insurance (XLF) will be the worst hit.

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Making the Grade Symposium in 2013 found that congestion on highways and delays in commutes riddle U.S. road networks. Congestion on the roads is a major concern when it comes to road safety. The U.S., on average, has a road fatality rate of 15 deaths per 100,000 people. This is more than 60% above the OECD average, as The Economist observed.

Of major U.S. urban highways, 42% are congested. As the organizations in the Making the Grade Symposium of 2013 estimated, over $101 billion is lost in labor productivity and wasted fuel annually as a result of being stuck in traffic.

economic losses

Market Realist – The graph above shows the economic loss experienced by various sectors due to hydro meteorological disasters. The susceptibility and vulnerability to damage for roads and bridges becomes much higher if the infrastructure is old.

Damage physical infra

Market Realist – The previous graph shows the physical damage occurring to various sectors due to hydro meteorological disasters.

According to ASCE estimates, if an additional $157 billion isn’t spent annually on infrastructure from 2014 to 2020, the following costs would accrue to the U.S. economy in that period. These costs would halt growth and dampen U.S. equity markets (SPY)(IVV).

    • GDP losses worth $3.1 trillion
    • Total trade losses worth $1.1 trillion
    • Annual decline of $3,100 in disposable income per U.S. household
    • $2.4 trillion decline in U.S. consumer spending (XLY)
    • Loss of 3.5 million U.S. jobs

Read on to the next part of this series to learn the reasons for crumbling U.S. infrastructure.


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