Commentary Studies & Guides

Infrastructure, the Economy and CRE

Photo by Matt Koffel on Unsplash

The American Jobs Plan addresses some of the nation’s most pressing problems: it would build up badly neglected infrastructure and transportation, takes decisive action on climate change and energy efficiency, invests in research and development, and would create millions of jobs, just to name a few.

An analysis by Moody’s Analytics found that the American Jobs Plan (AJP) would create more than 2.5 million jobs and increase GDP nearly $700 billion by 2025. Meanwhile, the plan’s funding for childcare and elder care would also have longer-term impacts on “human capital” by increasing the participation of women and minorities in the workforce, said Diane Lim, a George Washington University economist, during a recent webinar sponsored by the National Association for Business Economics (NABE).

Opposition to the plan is based not on the idea that all or even some of those things are not necessary, but that it is too big. Concerns are that the plan addresses areas (such as childcare and elder care) that are not traditional infrastructure, and that the corporate tax increases proposed to keep the plan revenue neutral might curtail growth.

However, those fears may not be persuasive. Moody’s chief economist Mark Zandi noted that the corporate tax cuts enacted in 2017 “did little to incent investment,” so partially reversing them is not likely to have a big impact on corporate behavior. Further, the cost of inaction to fix bridges and roads, improve water systems, create a national network of charging stations for electric cars, fight climate change, etc., is likely to be worse than the potential increase in the federal deficit.

“Infrastructure investment is long overdue and critical in promoting thriving CRE properties and the communities they serve,” said Lisa Pendergast executive director of the CRE Finance Council, an industry trade group. “The bill has much to offer, though balancing costs and priorities will be key as Congress moves forward.”

There is widespread agreement among economists that for decades the U.S. has neglected public investment in infrastructure. There also is a broad consensus that improving infrastructure would boost U.S. competitiveness and productivity by—among other things—facilitating transportation capacity, improving the country’s technological foundation, and modernizing the energy grid.

A full analysis can be found here:


About the author

Paul Fiorilla

Paul Fiorilla has more than 25 years of experience as a researcher and writer in the commercial real estate markets. He previously served as a vice president of research at Prudential Real Estate Investors in Madison, N.J., where he oversaw publishing of outlooks and thought leadership research. Before that, he covered real estate capital markets and CMBS at Commercial Mortgage Alert.

Add Comment

Click here to post a comment