Capitol Update 8/15/22
House sends $700B Inflation Reduction Act to Biden
The $700 billion Inflation Reduction Act was passed by the House on a party-line vote Friday and sent to President Joe Biden to be signed into law. The Associated General Contractors of America spoke out against the legislation’s labor stipulations, notably the Davis-Bacon prevailing-wage and registered apprenticeship requirements to make most clean energy and energy-efficient commercial building projects eligible for tax breaks. Full Story: Engineering News-Record (tiered subscription model)
Inflation Reduction Act would boost low-carbon materials in civil projects
The federal Inflation Reduction Act of 2022 contains more than $5 billion to incentivize the use of low-carbon building materials in public infrastructure projects and certain government-owned buildings. The sprawling $485 billion bill, which aims to fight climate change and mitigate inflation, passed the Senate Aug. 8 and is expected to go before the House of Representatives Friday. Its various investments and tax credits aim to help the U.S. slash its carbon footprint 40% by 2030, the U.N. Paris Agreement deadline to halve CO2 emissions.
Currently, the bill’s green procurement funding includes:
- $2.15 billion to install low-carbon materials in General Services Administration-owned buildings. The GSA owns about 1,500 buildings around the country, including office buildings, land ports of entry, courthouses, laboratories, post offices and data processing centers.
- $2 billion for Low-Carbon Transportation Grants to reimburse and incentivize the use of low-carbon materials for Federal Highway Administration projects.
- $250 million to develop and standardize Environmental Product Declarations for construction materials, with grants and technical assistance for manufacturers.
- $100 million to identify and label low-carbon materials and products for federally funded transportation and building projects.
The bill also contains $4 billion to improve resiliency in affordable housing, including funds for low-carbon materials, and allows FEMA’s Building Materials program to offer financial assistance for low-carbon materials and net-zero energy projects.
The economy added 528,000 jobs in July, and the unemployment rate ticked down to 3.5%. This broad-based job growth means that for the first time since the COVID-19 pandemic began, total employment has not only surpassed the level of February 2020 but reached an all-time historic high.
The Federal Emergency Management Agency is doubling funds for its Building Resilient Infrastructure and Communities program to $2.3 billion while also offering $800 million under the Flood Mitigation Assistance program. States, communities and other entities must demonstrate cost effectiveness; compliance with pertinent codes, standards and hazard mitigation practices; and environmental risk mitigation. Full Story: The Construction Broadsheet
More than 8 in 10 US cities plan to use funding from the bipartisan infrastructure law for roads, bridges and other major projects, the single most popular type of work, according to a survey of officials from 153 cities by the National League of Cities and Polco. Extending broadband service is also popular, with more than 30% of cities citing that as a priority. Full Story: Government Technology
The commercial component of the Dodge Momentum Index led the way in July, with a 5.5% gain as the overall index rose 2.9% to 178.7. The institutional component was down 2% due to fewer education and health care projects. Full Story: Dodge Data & Analytics
Friday’s unexpectedly strong reports on employment and wage growth could influence the Federal Reserve’s decision-making on interest rates and encourage policymakers to maintain a robust pace of increases. Charles Evans, president of the Federal Reserve Bank of Chicago, said last week that he would support a 50-basis-point hike at the upcoming meeting if data shows that the economy is cooling. However, a 75-basis-point hike is still in play if that does not happen, Evans said. Full Story: The Wall Street Journal Financial Times (subscription required) Reuters Bloomberg
Construction played its part in a strong overall US jobs report for July as the industry added 32,000 jobs for a 4.2% year-on-year improvement, according to the US Bureau of Labor Statistics. Gains in construction were evident across all sectors, leaving the industry’s unemployment rate last month at 3.5%. Full Story: Construction Dive (8/5), Engineering News-Record (tiered subscription model)
Inflation and labor scarcity may cause states and local governments to refocus their efforts on smaller projects using funds under the bipartisan infrastructure law, according to panelists questioned at a Brookings Institution forum explaining the law and its likely effects. Panelists answered an array of questions, offering their thoughts, as well, on the prospect for public-private partnerships with the arrival of new federal funding. Full Story: Brookings Institution
Inflation may be easing in some parts of the US economy, but not in construction. An analysis by construction consultancy Rider Levett Bucknall reveals the pace of cost growth continues to pick up from a baseline in 2001 extending to the middle of this year’s second quarter. Full Story: GlobeSt (free registration)
The consumer price index in July was up 8.5% from a year earlier, which is lower than analysts expected and may indicate that the pace of inflation is slowing. The core consumer price index, which excludes volatile food and energy prices, was up 5.9% year over year. Full Story: CNBC (8/10)
Strict zoning requirements are a known barrier to wind and solar development, but little information is available as to how those rules vary across states and localities. The National Renewable Energy Laboratory is working to change that with two new databases that track zoning requirements for wind and solar across the US. Full Story: Solar Industry
CPI for all items unchanged in July as fall in gasoline offsets shelter, food increases
In July, the Consumer Price Index for All Urban Consumers was unchanged, seasonally adjusted, and rose 8.5 percent over the last 12 months, not seasonally adjusted. The index for all items less food and energy increased 0.3 percent in July (SA); up 5.9 percent over the year (NSA).
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The Producer Price Index for final demand fell 0.5 percent in July. Prices for final demand goods declined 1.8 percent, and the index for final demand services advanced 0.1 percent. Final demand prices moved up 9.8 percent for the 12 months ended in July.
AECOM raises guidance amid higher profits, lower revenue
AECOM, the country’s 10th largest contractor, reported increased profits of $107 million Monday, or 75 cents per diluted share, but its $3.2 billion in revenue was 5% lower than a year ago. The Dallas-based firm’s backlog increased to $41.1 billion, up 3.5% from the $39.7 billion it posted 12 months previously. AECOM raised the midpoint of its fiscal guidance for earnings per share to between $3.35 and $3.50, an increase of 5 cents per share from the previous quarter.
Southern California’s Metrolink plans to enhance service between south Perris and downtown Riverside, moving ahead with a project to build 2.7 miles of track, a new passenger platform and a station expansion. The decision is enabled by a state grant of $25 million to complement $32 million from the federal government. Full Story: The Press-Enterprise (Riverside, Calif.) (tiered subscription model)
Facing a $4 billion backlog of infrastructure projects, the San Diego City Council is considering a proposal to raise the level of project costs that would require council approval. The change is seen as a way to speed many projects and save some money in the process. Full Story: Del Mar Times (Calif.)
A plan to widen US 101 to relieve congestion in Santa Barbara, Calif., and Carpinteria, Calif., began 12 years after voter approval in 2008 and is inching its way toward completion in 2027. Granite Construction is managing the $700 million project, which will add two high-occupancy vehicle lanes, upgrade local bridges, improve pedestrian access and complete bike lanes. Full Story: Construction Equipment Guide
It will cost at least $20 million to build a dam to prevent repeated flooding around an area where a contractor is trying to build a $110 million sewage-pump station in San Diego, city officials say. Meanwhile, the contractor has been forced to halt construction, a delay that may add even more to the cost. Full Story: The San Diego Union-Tribune (tiered subscription model)