Show US the (Infrastructure) Money

The Conference Board anticipates a mild, yet brief recession in the US starting before the end of 2022 (see The Conference Board Economic Forecast for the US Economy). However, the shallowness depends in part on the realization of government spending on infrastructure legislated in the $1.2 trillion Infrastructure Investment and Jobs Act (IIJA) (see Policy Brief: Infrastructure Investment and Jobs Act (IIJA) Rollout).  

Nearly $550 billion of the IIJA is new spending to be appropriated to states or awarded via competitive grants over a five-year period, some of which our US forecasters anticipate would start to be outlaid by the federal government in the second quarter of 2022. New expenditures will be for transportation, broadband internet, energy and power, water, and environmental resiliency and remediation.

If these projects are delayed into 2023, then real GDP growth might be 0.3 percentage points slower for the full year of 2022. Importantly, the recession that The Conference Board anticipates to start in 4Q 2022 might be accelerated to 3Q and be deeper (by 1 to 1.5 percentage points on a quarter-over-quarter seasonally adjusted annualized rate (SAAR)) in 4Q 2022.