As someone who participates in the design and construction of public facilities, I am biased towards increased funding in infrastructure. As such, there are two current trends that I find heartening. First, while total construction spending increased 0.1% last month, public construction increased 0.7% from June to $304.5 billion. As he artfully does, Bill McBride at Calculated Risk blog has figures that illuminate this increase. The first figure shows construction spending since 1993 and there's no surprise to anyone working in the construction industry that the residential and non-residential commercial building markets have been continuously heating up since rebounding from the Great Recession.
Spending Public construction peaked in 2009 with the "Shovel Ready" projects funded by U.S. D.O.T. Transportation Investment Generating Economic Recovery (TIGER) grants (now known as Better Utilizing Investment to Leverage Development, or BUILD, transportation discretionary grant program) and then moved sideways...until 2017. Since 017, there has been an uptick in on public projects.
Again, from my biased point of view, this is good news. Politicians from across the political spectrum have been in agreement that the U.S. needs greater investment in infrastructure (albeit with methods of funding causing many bones of contention) and that seems to be happening. While it has been turned into a running joke, there is widespread excitement every time the term "Infrastructure Week" is mentioned. This leads me to my second heartening trend. Private investment funds are raising large financing rounds for dedicated infrastructure investments. Here are two Bloomberg articles worth reading:
Investors Keep Flocking to U.S. Infrastructure, Even Without a Trump Plan
I Squared Raises $7 Billion for Infrastructure Investments
A quote from the first article is particularly positive:
"As we wait for formal U.S. federal financing to materialize, the private sector is taking action to raise funding, partner with all levels of government and build and improve infrastructure across the U.S., an initiative that benefits all stakeholders,” Randall said in an email. There’s “significant demand” from institutional investors for private credit strategies that provide diversification and yield, he added.
To be sure, the private sector will target infrastructure that has a revenue component to it (think power transmission or toll roads), otherwise there would be scant opportunity to provide a rate of return to investors. However, as those infrastructure assets attract private financing, that should reduce the total number of projects seeking government funding, making it easier for government agencies to fund assets that will benefit society but do not offer returns to private investors. This would represent a great form of public-private partnership on a macro scale that would lead to improved infrastructure and increased project backlog for those in the design and construction industry.