Understanding the potential impact of the American Jobs Plan on construction

Scott Hazelton, director, economics and country risk, IHS Markit, Andover, Mass., the economic forecasting firm that partners with the American Rental Association (ARA) to provide data and analysis for the ARA Rentalytics subscription service for ARA members, has written an article for his company’s website about the impact of the American Jobs Plan (AJP) on the construction market.

“Scott has provided a thoughtful analysis of the policy documents the Biden administration has released thus far of the AJP. As Scott rightly points out, the AJP is a policy document, not legislative text, thus the economic impact can only be framed in the context of ‘if the AJP is enacted,’” says John McClelland, Ph.D., ARA vice president for government affairs and chief economist.

“Of course, the other big issue that has not been addressed by the administration is how to pay for this legislation. Increasing the corporate tax rate is one proposal, but there already is resistance to that proposal among moderate Democrats in the House of Representatives and U.S. Senate. The legislative activity that will flow from these policy discussions is something ARA will follow closely and analyze with the help of our research partners at IHS Markit,” McClelland says.

In his article, Hazelton writes, “President Biden has announced his $2.2 trillion AJP, which the administration is promoting as an ‘infrastructure bill.’ While it does contain a healthy dose of needed infrastructure spending, it also includes billions for items such as incentives to purchase electric vehicles (EV) which go beyond any definition of infrastructure. It would be more accurately described as an ‘investment bill.’

The most widely recognized infrastructure needs assessment comes from the American Society of Civil Engineers (ASCE). As such, it makes sense to use their definition of infrastructure: transportation (aviation, roads and bridges, ports and inland waterways, rail and public transit), broadband communications, power and energy, public health management (solid waste, hazardous waste, sewer and stormwater, drinking water) and conservation and development (dams, levees, public parks). The ASCE also includes schools. In their 2021 Report Card for America’s Infrastructure, they peg the infrastructure funding gap at $2.6 trillion by 2029, given current and projected needs and funding commitments. Not that closing this gap would take their report card grade to a ‘B’; it reflects the difficulty in achieving everything.”

To read the rest of Hazelton’s article, click here.