A check with a little more bounce is in order.
Months ago, Congress passed an economic stimulus bill that wrote out a check to just about every homeowner in the U.S. The measure did little to ink a charge in the economy. In fact, one fiscal quarter later, Wall Street hit the skids so hard it was in need of a $700 billion bailout to repair one of the worst financial sinkholes in history. With the Dow continuing to experience labor pains, some members of Congress are hoping a second economic stimulus bill, one aimed at creating more jobs, will bounce the trend upward.
“Put the economic meltdown aside—just looking at the economy, next year we are definitely talking about a recession,” Brian Deery, senior director of the Highway & Transportation Division of the Associated General Contractors of America, told Roads & Bridges.
The fall could be a deep one. According to Deery, construction project starts could drop 9% next year, and on the nonresidential side, it could be worse. One of Deery’s members recently informed him that $50 million in orders were canceled in September, and the highway and bridge contractor does not see a strong purchase of new equipment on the horizon. Usually this owner turns over about 10% of his fleet annually.
“I think Congress is starting to read into that,” said Deery. “I think infrastructure spending makes sense to them now because I think they realize all of those rebate checks that were sent back to the people was wonderful and all, but it really did not have an impact, whereas infrastructure spending will create jobs and those workers are going to turn around and spend it at Wal-Mart.”
Congress, however, is having a difficult time working out the details. The House of Representatives passed its version of an economic stimulus bill—which included $12.8 billion for the federal-aid highway program—in late October. However, the Senate bill failed to pass.
The two have significant differences. The House legislation is more geared at creating jobs, while the Senate’s contains more political fluff from members of the Appropriations Committee. For example, one bullet point calls for money to provide U.S. Capitol police with new radios. However, the dagger in the Senate bill was a provision that extended the moratorium on the development of oil shale, a move that was not a popular one with Republican senators.
Now it all hinges on Congress’ desire to get things done during a lame duck administration. If an economic stimulus bill is passed before the year is out, and if it does include money for highway and bridge construction, it will send a positive vibe heading into the spring construction season. However, if those on Capitol Hill are unwilling to work over the final two months of the year, it could have dire consequences on the industry.
“Those in Congress who lose their election might not be so anxious,” added Deery.
Industry productivity also will depend on the credit crisis. Currently those at the DOT level are having trouble selling off bonds due to high rates.
