Spurred by continued increases in federal funding and renewed economic growth, the U.S. highway construction market should grow 4.2% in 2004, the chief economist for the Washington, D.C.-based American Road & Transportation Builders Association says.

William Buechner, ARTBA vice president of economics and research, says the expected congressional approval of $33.6 billion in federal highway investment for FY2004 — $2 billion more than FY2003 levels — will drive the market growth.

The value of construction work performed on highway and bridge projects is projected to be a record $62.5 billion in FY2004, up from $60 billion in FY2003.

Buechner, a Harvard-trained economist who served the Joint Economic Committee of the U.S. Congress for nearly two decades before joining ARTBA, says recent strengthening of the American economy will also be a contributing factor to the growth.

The nation's Gross Domestic Product increased at an 8.2% annual rate in the third quarter of 2003. Economists expect the economy to grow 3.9% in 2004 and to move above 4% per year the following year. Renewed economic growth should ease the dire state and local budget situation and permit renewed growth of investment in highways and bridges, he says.

The ARTBA forecast looked at the growth of the highway construction market over the next six years under several legislative proposals being considered as part of the reauthorization of the nation's highway and transit law known as TEA-21, which Congress is expected to debate in early 2004.

If Congress adopts the $375 billion House Transportation and Infrastructure Committee bill and state and local highway funding grows with the economy, there would be an average 7% annual growth in the highway construction market over the next six years. The $311 billion Senate Environment and Public Works Committee bill would generate 4.8% annual growth, Buechner says.

Transit and light rail construction grew sharply in 2001 and 2002, but has eased off slightly in 2003. For FY2004, Congress is expected to enact a small increase in federal transit investment — from $7.18 billion in FY2003 to $7.3 billion. This will likely help maintain the high levels of construction activity of the past few years.

Construction work performed on airport runways, taxiways and related projects was down in 2003, in part due to the diversion of more than $500 million of federal airport construction funds to airport security in FY2002 and 2003. Legislation to discourage this diversion has been enacted. Congress has approved $3.4 billion in FY2004 for airport construction — the same level as FY2003. Eliminating the diversion construction funds to airport security programs, however, should help foster modest growth in the airport construction market in 2004, Buechner says.