In theory, government stimulus is supposed to rev the economy up. You pull on the string with the hand of Uncle Sam a few times, you watch it whirr to life, and then let go, and watch the economy go on its merry way. Or something like that.
But it appears that’s not the reality of what’s happening. Instead we’re getting the sugar rush version of the stimulus. The economy is tired. Uncle Sam feeds it some sugar. It goes gaga running around the house, and then it crashes.
WSJ: Tim Word, vice president of Dean Word Co., a heavy-construction company in New Braunfels, Texas, said his income is now coming mostly from projects that are winding up. He said that in normal times he has about $100 million of signed contracts in hand. But that number has fallen to $30 million, and the pipeline is empty. In the past two years, his work force has shrunk nearly 40% to 260 from 420.
“Having something to bid on is the lifeblood of the industry, and it’s running out,” said Mr. Word. He isn’t sure what will happen next year without new projects. “There’s no pavement fairy that’s going to help.”
The good news for folks like Tim Word and his employees is, ironically, high unemployment!
Earlier this year the Obama administration was opposed to pushing a big highway bill, deterred in part by the prospect of raising gasoline taxes to pay for it. Faced with a 10.2% jobless rate, however, officials here are rethinking their stance. Thursday, the White House will hold a “jobs summit” to discuss ideas, which are likely to include shifting some spending to transportation projects.
Without an infusion of federal funding, state transportation departments say they can’t develop long-term roadway projects, which are critical to the industry. About half of states’ funding for such projects comes from the federal highway trust fund, which is funded by the gasoline tax.
Basically, there’s still to “pavement fairy” but there is another sugar hit coming.