The quickest way to hurt American economic output is to deny investment to the country’s infrastructure, which delivers everyday products as well as clean water and electricity to households and businesses.
The American Society of Civil Engineers says in its latest report that the result of such thinking will lead to greater prices and an inability to keep up with demand. “Failure to Act” also says that the United States will not be able to compete in global markets because of those excessive costs.
In effect, it would be penny wise and pound foolish to think that such investment can be delayed, it says, noting that each American household will lose $3,400 of disposable income each year by 2025 if remedies are not sought. And it will be $5,100 annually by 2040. How so? Travel times will be extended because of poor roadways, congested airports and outdated grids.
“As a consequence, U.S. businesses will be more inefficient. As costs rise, business productivity falls, causing GDP to drop, cutting employment, and ultimately reducing personal income,” the report says. However, “Closing each infrastructure investment gap is possible, and the economic consequences caused by these gaps are avoidable with investment.”
On a positive note, the engineers say that things are better than they have been. It’s just that they are not to where they need to be. The funding gap, it notes, is “quite substantial.”
Take electricity: an inadequate grid leads to power outages, which can cost the US economy billions in lost economic opportunities. For a short power outage, it says one industrial firm will lose anywhere between $2,600 and $6,600.
As for water and wastewater, it says that rising business costs will mean that communities would have a hard time meeting water quality standards, which would lead to unsafe drinking water and public health violations. And surface transportation deficits will not only mean longer delays but more expensive fixes in the long run. The price of products and services will thus rise.
“Less reliable service caused by aged infrastructure will force businesses into a series of unpalatable choices, including do nothing and endure the reduced service, which will increase costs of production,” the report says.
What can we expect? Without a resolution, the report says that the US would lose nearly $4 trillion total economic output, or GDP, by 2025 and $18 trillion in GDP by 2040, or $700 billion a year.