As it stands, 2024 has the potential to be a watershed moment for the U.S. and the network of highways and roads that connect the nation. Though spending on roadways has been climbing rapidly over the past two years, 2024 may be an utterly transformative year as infrastructure dollars hit the streets in large amounts.
The genesis of this momentum began with COVID itself as the federal government raced to restore the economy to its pre-pandemic strength. Not knowing how devastating the pandemic would be, policymakers removed virtually all restraints to spending, injecting trillions of dollars into the economy. Some of the most impactful packages were legislated even as the pandemic’s grip on the economy faded, including the American Rescue Plan Act of 2021, which was signed by President Biden on March 11th of that year, and the even more transformative Infrastructure Investment & Jobs Act (IIJA), signed approximately eight months subsequently on November 15th. The former package included $350 billion in direct federal assistance to state and local governments. The latter included $550 billion in new monies directed toward the nation’s infrastructure, including $110 billion in additional funding to repair roads and bridges and support significant transformational projects.
But before all of that activity, the incoming administration in Washington had already laid the ground for a slew of potential project delays. On January 25, 2021, President Biden signed Executive Order 14005, Ensuring the Future is Made in All of America by All of America’s Workers. The goal of the order is straightforward – to ensure that federal financial assistance catalyzes the maximum use of goods, products, and materials produced in the U.S.
Additionally, policymakers enacted the Build America Buy America Act as part of the IIJA. This established a domestic content procurement preference for all federal financial assistance obligated for infrastructure projects after May 14, 2022. The result is that contractors, procurement officials, and others have been scrambling to understand, satisfy, and/or manage such requirements, occasionally requesting waivers in instances in which American producers simply cannot satisfy demand. After all, supply chains were offshored for decades prior to the recent phenomena of reshoring and near-shoring.
Spending Trends to Date
According to data provided by the U.S. Census Bureau, construction spending related to highway and road has been inconsistent over the last two decades. No doubt the lack of a comprehensive highway spending bill at the federal level had some impact, with policymakers occasionally supplying jolts of spending power and then uncertainty as those multi-year packages wind toward a conclusion. Spending in this category can also be counter-cyclical since stimulus packages emphasizing infrastructure outlays are often passed during periods of U.S. macroeconomic stress.
For instance, during the recession-plagued years of 2007 and 2008, highway and road construction spending expanded 8.8 and 2.9%, respectively. In 2020, the year that Covid undid the economy, highway and road spending climbed 9.6%, in part because construction was deemed by many policymakers to be an essential industry.
Recent years has also been associated with highway/road spending growth, though 2021 was hardly fabulous. Covid was still interrupting jobsites and supply chain issues were deeply problematic. That year, spending increased only 2.8% in nominal terms, and was negative once one adjusted for inflation. But the subsequent two years were much better, with spending rising 13.2% in 2022 and 15.3% in 2023 based on data available through November.
Spending Momentum Continues
Many significant highway and road construction projects are set to commence. For instance, In Arizona, the Department of Transportation is set to initiate several freeway projects around Phoenix. In Oklahoma, the state’s Department of Transportation is launching improvements on the I-44 and U.S. 75 interchange. The latter projects are part of an extensive $8.8 billion, eight-year plan.
In addition to these road projects, 2024 will also see the start of several critical bridge construction and renovation projects across the U.S. For example, the Gordie Howe International Bridge is a major project spanning the Detroit River, which connects the U.S. and Canada. Designed to promote increased border traffic, this project includes new entry points at the U.S. and Canadian bridge terminals, reflecting a significant investment in cross-national cooperation and infrastructure.
Another critical project is the Brent Spence Bridge renovation in Cincinnati, OH, and Covington, KY. This project will upgrade the existing structure and add a new bridge to increase interstate travel, especially along a crucial freight route that connects Canada and Florida. This project is part of President Biden’s broader initiative, which has already launched more than 7,800 bridge repair projects. These expansive projects in Arizona, Oklahoma, Michigan, Ohio, and Kentucky, among others, emphasize a broader focus on enhancing and modernizing national infrastructure. Those contractors not involved in highway and road projects should also be encouraged since greater international, national, and regional connectivity creates opportunities for private developers and others translating into addition enhancements and alterations of America’s built environment.
Looking Ahead
America’s economy is in the middle of a period of remarkable transformation. Not only are infrastructure outlays on the rise, but innovations such as artificial intelligence, phenomena such as e-commerce and remote work, and the ongoing aging of the U.S. population are creating opportunities for data center construction, adaptive reuse of office buildings and shopping centers, and a need to invest in both outpatient and inpatient medical facilities. The reshoring of manufacturing and energy transitions are also creating new opportunities for contractors.
Each of these investments must be connected to the broader society, creating an ongoing need to continue to expand America’s highway, street, and bridge networks. For now, the money is there to finance many needed improvements and various federal agencies appear to be navigating through complex Buy America provisions, laying the foundation for a very active 2024.