Cities, States Spending Less on Infrastructure

An Amtrak train that derailed earlier this month resulting in the death of eight people and the injury of more than 200, sparked a debate on declining infrastructure spending and its devastating effect on American cities and states.

Some claimed that conservative opposition to more funding for Amtrak contributed to the accident, while President Barack Obama pleaded for more infrastructure spending and former New York Mayor Michael Bloomberg condemned Congress for “kicking the can down a pothole-filled road.”

However, the main point was this: construction spending has dropped significantly, relative to the size of the economy, in the last five years.

Yet the municipal bond market—which is where states, cities and all types of local agencies issue bonds to finance their needs—recorded pretty robust bond issuance in 2015.

“We’d have to go back to 2008 to experience an April with as much new municipal issuance as tallied last month,” Alan Schankel, Janney’s head of municipals said in a research note.

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