State Transportation Budgets ‘Squeezed,’ ARTBA Says

Ever-increasing material costs are squeezing state transportation budgets and causing reductions in the actual amount of construction work put in place, according to a new American Road & Transportation Builders Association economic report.

A major spike in diesel fuel, steel and asphalt were the driving forces behind a 19% jump in highway and street construction materials in June compared to the same month in 2007.

The ARTBA “Highway Construction Producer Prices” report documents year-over-year increases in the following categories:

• Iron and Steel Scrap: 97%
• Diesel Fuel: 85%
• Asphalt Paving and Block Manufacturing: 14%
• Sand, Gravel and Crushed Stone: 7%
• Ready-mix Concrete: 3%
• Concrete Block and Brick: 3%
• Cement: 1%

“The nominal value of construction work on highways, bridges and related projects was up 3.1 % through May 2008 to $24.3 billion, compared to the first five months of 2007,” says Alison Premo Black, ARTBA economist and vice president of policy.

However, “When you take into account rising construction costs, including material prices, the actual volume of construction work performed on highways and bridges so far in 2008 is down about 5 to 7%.”

She added that while the market trended down, transportation construction was faring better than the residential construction sector, which was down 27 % through June 2008 compared to the first half of 2007.

Stanley’s Lewis Named to National Public Works Committee

Robert Lewis, project principal in Chicago with Des Moines, Iowa-based Stanley Consultants, an engineering firm, was recently appointed to the National Membership Committee of the American Public Works Association in Washington, D.C.

As a member of the executive committee, Lewis will address membership issues and concerns and make recommendations on recruitment/retention issues and member benefits.

U. of I. Flash Index Breaks 12-month Decline

The University of Illinois Flash Index stopped a 12-month slide by holding steady in June.

The index level of 102.3 reached in May remains at its lowest point since September 2004, considerably lower than the level of 106.8 posted in June 2007. However, the index remains above 100, which is the dividing line between growth and decline.

“It is unlikely that the U.S. economy is currently in a recession,” says economist J. Fred Giertz, who produces the Flash Index. “The economy grew during the first quarter of 2008 at a slow 1% rate. Most observers believe the just-ended second quarter will be much the same. This is clearly a major slow-down, but not a recession.

All three components of the index—individual income tax, corporate tax and sales tax receipts—were up modestly in real terms from the same month last year.

Illinois is growing somewhat more rapidly that the national economy, Giertz says. The state has avoided some of the housing market and subprime lending problems that have plagued states like Florida, California and Arizona, and the fallback in the automobile industry that has hurt Michigan and Ohio.