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The Federal Reserve Bank of St. Louis serves the Eighth Federal Reserve District, which includes all of Arkansas, eastern Missouri, southern Indiana, southern Illinois, western Kentucky, western Tennessee and northern Mississippi.

New St. Louis Fed Research Unearths Some Surprises While "Digging Into the Infrastructure Debate"
ST. LOUIS, MO, (SLFP.com), July 19, 2009 - The nation's infrastructure may not be in as bad of shape as widely thought, according to "Digging Into the Infrastructure Debate," a recent article published in the July 2009 issue of The Regional Economist, the quarterly journal of business and economic issues published by the Federal Reserve Bank of St. Louis.

Nonetheless, there appear to be some categories of infrastructure that are lacking or need improving, according to the article's authors, St. Louis Fed economist Kevin Kliesen and research associate Douglas Smith. In addition, changing demographics and structural trends will require local governments to make some hard choices among an increased number of projects that will be competing for dwindling resources.

The American Recovery and Reinvestment Act of 2009 has provided $111 billion for infrastructure and science projects, with about $27.5 billion designated for highway construction spending. Officials in the seven states make up the Eighth Federal Reserve District have already proposed infrastructure projects totaling several billion dollars.

However, most of nation's bridges and roads currently appear to be in pretty good shape, according to data from the U.S Department of Transportation. The percentage of urban bridges rated in good condition rose to about 70 percent in 2008 from 57 percent in 1990, while close to 77 percent of bridges in rural areas were rated in good condition. Rural bridges represent close to 75 percent of all U.S. bridges.

In addition, the number of interstates and other freeways and expressways located in urban areas rated in poor or mediocre condition has declined measurably between 1995 and 2005. The exception: minor arterial roads in urban areas. The percentage of these roads reported as poor or mediocre has risen to 28 percent from 20 percent from 1995 to 2005. Major arterial roads in this condition remained at 27 percent during this time period.

"The evidence that the public's infrastructure has fallen into widespread disrepair does not appear to be overwhelming. Even if it turns out to be, ongoing and emerging structural changes in the economy may necessitate a more careful assessment of future outlays for traditional infrastructure," the authors say.

Examples of ongoing and emerging changes will likely include:

an increase in higher education facilities (Kliesen's and Smith's research revealed that in recent years, per capita infrastructure spending has shifted more toward higher educational facilities such as two-year and four-year colleges, and away from highways, health care and military infrastructure);
an increasing share of commerce conducted over the Internet, which could reduce the need for traditional facilities like airports and roads while increasing the need for other types of facilities and equipment;
the potential for a shift to new kinds of energy infrastructures if the price of traditional, carbon-based fuel prices resume increasing in real terms;
an increased demand for health care facilities as a groundswell of baby boomers retires.

"Going forward, private and public policy makers may need to think anew about how they use their scarce resources to build the nation's infrastructure of the future," Kliesen and Smith said.

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