Thanks to massive budget and deficit cutting, government investment is free-falling off a cliff. Net real government investment – by federal, state, and local governments after depreciation and adjusting for inflation – was just $91 billion in the first half of 2013. This is less than half of what it was when the recovery began in 2009.
Government investment is what goes into maintaining and building our nation’s infrastructure, which includes highways, bridges, and ports. It also includes investment in equipment, and intellectual property. The chart below shows what government investment was in our nation’s infrastructure, equipment, and intellectual property after depreciation, and after adjusting for inflation. Since 2009, real net government investment has fallen by about $114 billion, or 56 percent.
The drastic fall-off in real net government investment is quite startling. Worse, the sharp fall-off in real net government investment across the federal, state and local government appears to be accelerating. Current real net government investment is now at levels not seen since 1983 – a historic low.
The largest drop-off in real net government investment has been in structures, which comprises the majority of government investment. Real net government investment in our nation’s physical infrastructure has fallen by an astonishing 53 percent, or $78 billion, since 2009.
Such little investment in our nation’s infrastructure will certainly add to the slow recovery going forward. And with more spending cuts almost assured, the end of this story is not looking bright.