- Buyer's guide
September Newsline: Stimulus impact on utility construction, 2009 infrastructure spending drop, and more
- Stimulus funding will be delayed as new regulations are developed and implemented;
- Delays will take place during the next six to nine months and will be followed by a robust upturn in utility construction spending for traditional projects coupled with a serious upswing in new technologies spending; and
- Opportunities abound for utilities and major constructors as well as residential and commercial builders to form new strategic alliances to take advantage of the changing landscape.
Specific opportunities exist for utilities. They can assist regulators in understanding new rules and designing new regulations to help state public utility commissions compete for federal funds; and be positioned to shape regulations to improve their business.
Infrastructure spending to fall in 2009 despite stimulus
Despite an infusion of federal stimulus funds, infrastructure spending in the U.S. is still expected to decline 4.3 percent in 2009. According to the Second Quarter 2009 U.S. Infrastructure Market Analysis from IHS Global Insight’s Construction Service, the infrastructure market has been a victim of large state government deficits and funding shortfalls to cities and towns. IHS Global Insight compiles the State of the Equipment Rental Industry reports for the American Rental Association (ARA) and Rental Management.
Without infrastructure spending in the power segment on several new oil refineries and pipeline construction, total infrastructure construction would slip 6.8 percent in 2009. IHS Global Insight expects infrastructure spending to decline 1.6 percent in 2010 and then grow 2.4 percent in 2011 as tax receipts improve for state governments and the federal stimulus package, totaling approximately $120 billion for infrastructure, is fully implemented.
With the exception of power, all infrastructure sub-sectors are expected to drop in 2009.
Of particular note is construction spending for water and sewer infrastructure is expected to fall 6.5 percent in 2009 despite increased federal stimulus spending. The additional federal stimulus funds and the gradual recoveries in the economy and housing market should set this sector up for a strong rebound in 2010 and 2011, growing 9.8 percent in 2010 and 7.4 percent in 2011.
To get the complete Second Quarter 2009 U.S. Infrastructure Market Analysis Executive Summary, visit www.ihsglobalinsight.com/constructionoutlook.