Deteriorating Infrastructure and Growing Investment Gap Will Reduce U.S. GDP By $10 Trillion in 20 Years: Economic Study
January 12, 2021
New Report from ASCE says American consumers will lose $3,300/year, and manufacturers and exports will be harmed
- Infrastructure inadequacies will stifle U.S. economic growth, cost each American household $3,300 a year, cause the loss of $10 trillion in GDP and lead to a decline of more than $23 trillion in business productivity cumulatively over the next two decades if the U.S. does not close a growing gap in the investments needed for bridges, roads, airports, power grid, water supplies and more, according to a new economic study released today.
The report from the American Society of Civil Engineers (ASCE),
Failure to Act: Economic Impacts of Status Quo Investment Across Infrastructure Systems,
finds that continued underinvestment in infrastructure and the inefficiencies that will result will have a cascading effect on the economy, increasing the burden on families, business productivity and overall GDP year after year.
Major sectors like manufacturing, health care, housing, food services, recreation and more would also be harmed, the study said. The study finds that U.S. manufacturers are especially vulnerable to underinvestment because the production of goods - such as cars, chemicals, foods and metals - requires energy, water, transportation systems and ports for those of goods being shipped, including to international markets. If the infrastructure investment gap is not closed
, the report says U.S. exports will be reduced by $2.4 trillion and the country will lose $4 trillion in trade, which will lead to the national trade deficit to balloon by $626 billion by 2039.
Jobs losses nationally will amount to 3 million jobs in 2039. The report estimates that about 47% of the jobs lost in 2039 will be in high wage and high production jobs including manufacturing, finance, insurance and real estate, professional services and healthcare.
"America's infrastructure bill is overdue, and we have been ignoring it for years," said Tom Smith, ASCE Executive Director. "There's no better way to jumpstart the economy, while also lessening the financial burden on businesses and families, than by making a down payment on our infrastructure now - transit systems, bridges, water treatment plants, and the grid - to ensure these systems are sustainable, resilient and safe for communities across the nation."
Between now and 2039, the ASCE report estimates that nearly $13 trillion is needed across 11 infrastructure areas: highways, bridges, rail, transit, drinking water, stormwater, wastewater, electricity, airports, seaports and inland waterways. With planned investments in infrastructure currently totaling $7.3 trillion, that leaves a $5.6 trillion investment gap by 2039.
The report finds that the infrastructure investment gap persists. The investment gap for surface transportation investment continued to grow from the previous study in 2016-- from $1.1 trillion over 10 years to $1.2 trillion over 10 years. In some areas, increased investments from the federal and state level have helped shrink the investment gap or hold it steady, including in inland waterways, ports and to a lesser extent, aviation. However, in the areas that are most recognizable to Americans - water, wastewater and surface transportation - the nation is falling farther behind.
However, the report says that most of the economic declines from worsening infrastructure - particularly those forecast from 2030-2039, when projected impacts exponentially escalate - can be prevented with prioritized investments. These investments will safeguard against:
- 80% of gross output losses, or $18.8 trillion. This is about three times the manufacturing industry's gross output in 2019.
- 79% of GDP declines, or $8.1 trillion. This is more than 2x Germany's annual GDP in 2019.
- 78% of disposable household income losses, or $7.6 trillion. This is half the total combined disposable income of all Americans in 2019.
This analysis finds that with an increased investment of $281 billion a year - $5.48 more per household a day- the U.S. can eliminate this drag on the economy, protecting by 2039:
- $10 trillion in GDP
- More than $23 trillion in total output (primarily business sales)
- More than 3 million jobs in 2039
- More than $3,300 in a family's annual disposable income each year from 2020 to 2039, which is over half of the average American's household's monthly expenditure of $5,102.
"Once again, the American Society of Civil Engineers has demonstrated, in stark detail, the high price Americans pay for failing infrastructure," said Rep. Earl Blumenauer (OR-03). "The cost of inaction is too great for Congress to sit idly. I look forward to working with ASCE, President-elect Biden and Secretary Buttigieg to finally get the job done and rebuild and renew America."
"Infrastructure is a budget busting issue for America's communities and families. So many local governments are struggling to balance their budgets due to the additional financial pressures of COVID-19. Meanwhile, Washington has failed to step up on infrastructure," said Clarence Anthony, CEO and Executive Director, National League of Cities. "America's cities, towns and villages are ready to work with Congress, President-Elect Biden and his Administration to break out of this vicious cycle of emergency repairs and get our nation's infrastructure fixed."
A research team comprised of EBP, Downstream Strategies, Daymark Energy Advisors and the Interindustry Forecasting Project at the University of Maryland (INFORUM) worked with ASCE to develop this study.
To view the full
report and additional data, visit
ABOUT THE AMERICAN SOCIETY OF CIVIL ENGINEERS
Founded in 1852, the American Society of Civil Engineers represents more than 150,000 civil engineers worldwide and is America's oldest national engineering society. ASCE works to raise awareness of the need to maintain and modernize the nation's infrastructure using sustainable and resilient practices, advocates for increasing and optimizing investment in infrastructure, and improve engineering knowledge and competency. For more information, visitwww.asce.org
or www.infrastructurereportcard.org and follow us on Twitter, @ASCETweets and @ASCEGovRel.