The infrastructure across the United States is in a state of near collapse. Due to the cuts from the federal budget for the past 40 years, we have failed to maintain our aging infrastructure. Now 1 in 9 bridges in the United States as structurally deficient, requiring extensive repair or complete replacement. And some are actually failing. The costs to both lives and productivity from the failure to support these are outweighing the money saved in the federal budget.
A new paper from the Federal Reserve Bank of San Francisco (FRBSF), goes into detail on the economic benefits of infrastructure construction and repair. From highways to bridges to rail, the economic impact of these systems they found to be huge, far outweighing the up front costs.
The common argument against such projects has been that they are too long-term, and would not have sufficient short-term growth to address any economic crisis. However, this has not been studied in the past, and lacked evidence. The FRBSF report is one of the first to thoroughly study this, and its results are remarkable in that they fly in what is considered “common knowledge.”
What they found was that within the first year of any infrastructure project, a solid 10% GDP growth grew out of that project. Within 10 years, the project had not only paid for itself, it had a huge return on investment in GDP growth. Every dollar spent resulted in 2 dollars of GDP growth. That is money directly in people’s pockets, directly improving their way of life.