After driving around my neighborhood on Long Island yesterday to survey the damage done by Hurricane Sandy, I’m changing my forecast. I think we will be without electricity for much longer than a week. Power lines are down everywhere. Many are supporting broken trees that are dangling dangerously over the roads. The repair crews can’t even begin to do their jobs until all the tree debris is removed. I was hoping to see an army of workers repairing the damage. Instead, they were nowhere to be seen.
I have some advice for our leaders in Washington. Next time you folks decide to spend $800 billion to stimulate the economy, do so on a national infrastructure program to bury all the power, phone, and cable lines. This sensible idea was conveyed to me by one of our accounts in Geneva in an email message yesterday: “[We] are baffled by the phenomenon of the US constantly losing power, whenever there is a storm. Why aren't US power lines underground? Nobody here in Switzerland has seen a power line above ground since their childhood--they've all been placed underground, so they are safe from the elements. And there are no power losses in the country…no matter how heavy a snowstorm or a windstorm!”
Burying all those utility lines would certainly be a good stimulus program for the economy. The American Recovery and Reinvestment Act (ARRA), passed by Congress in February 2009, supposedly allocated a significant portion of the $800 billion in stimulus money on “shovel-ready” construction projects. I don’t believe these included burying wires and cables. So where did all the money go?
Public construction spending by federal, state, and local governments actually peaked at a record high of $326 billion (saar) during March 2009 and has been trending down since then! It was down 15.5% from the peak to $275 billion during August. VP Joe Biden was in charge of monitoring the ARRA’s outlays. I’m surprised that Paul Ryan, during his debate with the all-smiles VP, didn’t ask, “Where did all the money go?”
If all that money had gone into construction, then the industry would have greatly expanded its payroll tally, which has been flat-lining around 5.5 million workers since 2010, more than 2.0 million less than the record highs of 2006 and 2007. Digging down into the data on public construction, the only uptrend since 2009 is in spending on health care facilities. There are downtrends in spending on education, sewage & waste disposal, power, and water supply structures, with transportation facilities turning up recently.
Today's Morning Briefing: Some Bad Breaks. (1) Plenty of damage in the neighborhood. (2) Digging ditches to get out of the ditch might have been a good idea. (3) Question for the Veep: Where did all the money go? (4) Maybe the shovel-ready projects weren’t ready. (5) ADP replaces its old numbers with new ones. (6) Waiting for Jack’s next tweet. (7) Waiting for the next “One.” (8) Waiting for the power. (9) From outage to outrage. (10) Still expecting yearend rally. (11) Some good news out of China. (More for subscribers.)