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Jul 25, 2023 254 likes •527 views

Economic Impacts of Transportation Investment Alison Premo Black, PhD Senior VP & Chief Economist, ARTBA North Carolina FIRST Commission August 30, 2019 Transportation Investment Grows the Economy Short Run Impacts Long Run Benefits

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Economic Impacts of Transportation Investment

Alison Premo Black, PhD Senior VP & Chief Economist, ARTBA North Carolina FIRST Commission August 30, 2019

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Transportation Investment Grows the Economy

Source: ARTBA Economic Analysis & State Economic Impact Studies

Long Run Benefits

GDP Growth
Increase Competitiveness
Productivity Gains
Raise Standard of Living
Grow Income & Profits

Short Run Impacts

Increase Demand
Jobs
Output
Wages
Value Added

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Transportation Investment Grows the Economy

Source: ARTBA Economic Analysis & State Economic Impact Studies

Opportunity Cost

Loss of potential economic activity
Increased Cost for Businesses
Potential Deteriorating Conditions
Fewer Improvements Made
Missed Business Opportunities

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Transportation Investment Improves Safety

About 2/3 of highway fatalities due to roadway conditions and related factors

1.66 1.18 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

North Carolina Highway fatalities per 100 million VMT

NC Highway fatalities per 100 million VMT

Source: NHTSA Fatality Analysis Reporting System, Pacific Institute for Research & Evaluation “On a Crash Course: The Dangers and Health Costs of Deficient Roadways.”

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Economic Impact of Transportation Construction $7.4 Billion 2019 public and private transportation construction and maintenance investment in North Carolina

Source: ARTBA estimates based on data from Federal Highway Administration, U.S. Census Bureau and U.S. Bureau of Economic Analysis

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Economic Impact of U.S. Transportation Construction

Source: ARTBA 2015 U.S. Transportation Construction Profile

Transportation construction generates $15 billion in total annual economic activity in North Carolina

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Economic Impact of Transportation Construction

Transportation construction contributes $8 billion to state GDP … accounting for 1.4% of total GDP

Source: ARTBA analysis and U.S. Bureau of Economic Analysis

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$7.9 $7.8 $7.4 $7.0 $5.6 $5.1 $4.6

$0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 $8.0 $9.0

Computer System Design Broadcasting and telecommunications Transportation Capital Outlays & Maintenance Educational services Natural resources and mining Machinery Manufacturing Arts, entertainment, and recreation

In billions

Annual Industry Contributions to North Carolina GDP, 2018

Economic Impact of Transportation Construction

Source: U.S. Bureau of Economic Analysis, ARTBA calculations

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Economic Impact of U.S. Transportation Construction

Transportation Construction supports

ver 110,000

jobs in North Carolina

Source: ARTBA analysis, U.S. Bureau of Labor Statistics and U.S. Bureau of Economic Analysis

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Wage & Tax Impacts of Transportation Construction

Direct & Indirect Wages: $4.2B State & Local Tax Contribution Transportation Investment

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Additional Employment Impacts

Over 2 million jobs in tourism, manufacturing, agriculture, mining, retailing and other industries are dependent on North Carolina’s infrastructure network.

Source: Bureau of Labor Statistics July 2019 seasonally adjusted employment information for mining and logging, construction, manufacturing, trade, transportation and utilities and leisure & hospitality employment.

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Transportation Investment - Long Run Benefits

–Creates tangible assets that are long-lived –Access to jobs –Market access for businesses –Reduced operating and production costs –Agglomeration Economies

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Benefits for Businesses, Employees and Consumers

Source: Definitive Guide to Transportation, The Principles, Strategies and Decisions for the Effective Flow of Goods, FT Press

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U.S. Businesses Spend $1.6 trillion on Logistics

Inventory- carrying cost, $494, 30% Truck Transportation, $774, 48% Other Transportation Costs, $218, 13% Water & Port Transportation, $48, 3% Administration, $91, 6%

U.S. Logistics Costs 2018, in billions

Source: The 30th Annual State of Logistics Report, CSCMP 2019

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Opportunity Costs - North Carolina Percent of Total Travel on Deficient Highways

5.5% 31.3% 0% 5% 10% 15% 20% 25% 30% 35% Initial Value Year Five Year Ten Percent of Travel

Investment to Support All Cost-Beneficial Projects Current Investment Levels

Source: ARTBA analysis based on U.S. Department of Transportation HERS model. Actual results depend on selection of projects within the model, based on cost-benefit ratio, which will likely be different from actual project selection. Does not include local spending.

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North Carolina – Transportation Challenges

6,248 bridges with identified repair at a cost
f $1.9 billion
10% of bridges are structurally deficient in

poor condition

12% of highways need repair
Growing cost of congestion
Increasing projections for freight shipments
Changes in technology and fleet dynamics

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Vehicle Miles Traveled in North Carolina

60 70 80 90 100 110 120 130

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Billions of miles traveled

Source: Federal Highway Administration, Highway Statistics Table VM-2

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Cost of Congestion in Major Urban Areas

$483

$727

$568M $1.7B

$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 200 400 600 800 1,000 1,200 1,400 1,600 1,800

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Cost per Driver Total Annual Cost, in millions$

Source: Texas Transportation Institute, Urban Mobility Report data for Charlotte, Greensboro, Raleigh and Winston-Salem.

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The Value of North Carolina Truck Freight Shipments

$381.5 $428.2 $460.4 $486.6 $511.7 $546.5 $0 $100 $200 $300 $400 $500 $600 2015 2020 2025 2030 2035 2040

Billions

Source: U.S. Department of Transportation Freight Analysis Framework

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North Carolina Household Expenditures

$61.88 $91.33 $65.44 $88.17 $151.26 $57.48

$0 $50 $100 $150 $200 Phone Services Electricity and Gas Television and Internet Road and Transit Improvements

AVERAGE MONTHLY HOUSEHOLD EXPENDITURES

Landlines Cell phones Cable Internet Electricity and gas Motor fuel taxes (state and federal), registrations, fees & tolls

Source: FHWA Highway Statistics, Bureau of Economic Analysis

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Future Trends: Share of New Sales of Alternative-Fuel Light-Duty Vehicles Will At Least Double

24% 36% 12% 27%

0% 11% 21% 32% 43% 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050 % of New Light Duty Vehicle Sales in U.S.

Low Oil Prices High Oil Prices Reference Case

Source: ARTBA analysis of U.S. Energy Information Administration, Annual Energy Outlook 2018. Three scenarios are reference case, low oil prices and high oil prices with clean power plan.

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Future Trends: Total Stock of Alternative-Fuel Light-Duty Vehicles Will Continue to Grow

22% 31% 10% 25%

Low Oil Prices High Oil Prices Reference Case

Source: ARTBA analysis of U.S. Energy Information Administration, Annual Energy Outlook 2018. Three scenarios are reference case, low oil prices and high oil prices with clean power plan.

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Future Trends: Number of Gasoline Internal Combustion Engine Light-Duty Vehicles

236.2 168.6 214.9 206.3

150 160 170 180 190 200 210 220 230 240 250 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050 Millions of Light Duty Vehicle in U.S.

Low Oil Prices High Oil Prices Reference Case

Source: ARTBA analysis of U.S. Energy Information Administration, Annual Energy Outlook 2018. Three scenarios are reference case, low oil prices and high oil prices with clean power plan.

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Source: ARTBA analysis of FHWA Highway Statistics data, total ten year average 2006-2015 from tables SF-1 and SF-2. The percent is the ratio of federal aid reimbursements to the state and total state capital outlays and is indicative of the importance of the federal aid program to state capital spending for highways and bridges. Does not include local capital spending. Federal highway reimbursements are primarily used for capital outlays, including construction, right of way and engineering, but are also used for debt service for GARVEE bonds. * States that have issued GARVEE bonds before 2014.

81%* 34% 52% 63%* 68%* 91%* 72% 58% 61%* 74%* 86%* 61%* 70% 42% 49% 57%* 34% 65% 56% 71% 51% 39% 42% 63% 42%* 68% 65% * 71% * 58%* 49% 44% 71% 47%* 71%* 36% 49% * 60%* 60%* 43% HI 80% 78% VT 80% CT 67% RI 97%* DE 48%* NJ 28%* MD 41%* DC 54%* NH 52%* 50 to 69% of state highway & bridge capital outlays MA 41% 51% Over 69% of state highway & bridge capital outlays 28 to 49% of state highway & bridge capital outlays

Federal funds, on average, provide 51% of annual State DOT capital outlays for highway & bridge projects

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Source: ARTBA analysis of the FAST Act. Project costs are expected to grow in line with historical averages according to the ARTBA price index, which takes into account changes in material prices, industry wages and overall inflation. Inflation forecast of 2% from CBO's August 2015 report An Update to the Budget and Economic Outlook: 2015 to 2025.

$46.4 $40.3 $41.3 $42.0

$39 $40 $41 $42 $43 $44 $45 $46 $47 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Billions

FAST Act Obligations for the Federal Aid Highway Program

Nominal Obligations Adjusted for Project Costs Adjusted for Inflation

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Alison Premo Black Senior Vice President & Chief Economist American Road & Transportation Builders Association ablack@artba.org @APremoBlack 202-289-4434