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Editor's Note July 2011: Economy Sputters Along, While U.S. Infrastructure Crumbles

July 2011
In our last issue, I noted that U.S. manufacturing had been one of the strongest sectors of the economy since the recession ended in June 2009. The Institute for Supply Management (ISM) had reported that its manufacturing activity index rose in April to 60.4. Then, in May, that activity slowed. The ISM index of manufacturing activity fell sharply to 53.5 in May. In June, the index recovered somewhat, registering 55.3. All of these 50+ readings do indicate an expanding manufacturing sector but, needless to say, one that doesn't appear too robust as of this writing.

Now The Conference Board tells us that its Consumer Confidence Index slipped from 61.7 in May to 58.5 in June. Americans seem worried about the U.S. economic outlook as well as their own future earnings - so they're keeping a close watch on how they spend their money, especially when a good chunk of it is going to pay at the gas pumps. Federal Reserve Chairman Ben Bernanke confirmed what the consumer was already feeling when he stated that the recovery "is continuing at a moderate pace, albeit at a rate that is both uneven across sectors and frustratingly slow."

Some suggest that one way to boost economic growth is for the government to invest in infrastructure. In a recent Washington Post editorial, Larry Summers, the former Treasury Secretary under Clinton and economic advisor to President Obama, said such investment would help the United States to avoid a "lost decade" of economic hardship. It's true that infrastructure projects, including mass transit development and highway maintenance, would create many jobs. The importance of infrastructure to a region's economic growth cannot be overstated.

Interestingly, a recent study from Ernst & Young and the Urban Land Institute - Infrastructure 2011: A Strategic Priority - reveals that trillions of dollars have been spent rebuilding and expanding infrastructure around the world, but not in the United States. According to E&Y's Global Real Estate Leader Howard Roth, this lack of an ongoing, strategic commitment to rebuild and expand its infrastructure will begin to seriously weaken U.S. competitiveness. Roth advises that refurbishing and expanding global market gateway cities - e.g., New York, Los Angeles, Miami, Houston, and others - should be a priority.

In this issue of Area Development, we focus on infrastructure as well as the entire supply chain in our Special Logistics Report, beginning on page 18. The articles contained in this section focus on the need for infrastructure along U.S. trade corridors to keep pace with the demands of increasing global trade; flexible, diverse supply chain strategies; the importance of infrastructure, of all types, in the location decision; the use of IT and green technologies in the supply chain; as well as recent free-trade agreements currently awaiting congressional approval.

And even those arguing about the best way to spur U.S. economic growth would have to agree that the nation's infrastructure needs a upgrade - now.

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