A $1.6 trillion market in the waiting -- the needed investment in infrastructure

An aging infrastructure

What is the U.S.'s primary infrastructure problems? Poor road conditions that cost U.S. motorists $54 billion a year in repairs and operating costs, massive public underinvestment in the nation's drinking water system, an inadequate energy infrastructure and a limited rail network that's creating significant delays for the first time since World War II, among other infrastructure deficiencies.

Still, the above is not to say that the United States will commit to repairing all of the above systems, or commit $1.6 trillion. The nation's defense needs, already above $1.2 trillion in cost for the combined War on Terror and Iraq War, are likely to require considerable funding for the foreseeable future and will undoubtedly divert some funds away from infrastructure projects.

However, while it's difficult to pinpoint an end year for the War on Terror given its asymmetries, it is plausible to suggest that major hostilities in the Iraq War, but not necessarily a universally-recognized peace, will occur in the years ahead. If it does, it will free-up some funds for U.S. infrastructure repair.

Benefits for U.S.

Further, Frank Holmes, CEO and Chief Investment Officer of U.S. Global Investors, goes on to state that when the infrastructure rebuild occurs in the U.S., the nation will experience a double-benefit. First, it will help create the infrastructure systems required for future economic growth, for the United States of the 21st century. Second, and perhaps not as obvious, the rebuild will create hundreds of thousands of good-paying, domestic jobs -- in construction, engineering, maintenance, design, and the like; the societal and economic spin-off effect from these jobs-with-disposable income can not be underestimated, in Holmes view.

Economic Analysis: U.S. Global Investors' report is a research document worth reading. It suggests an infrastructure spending era not seen since perhaps the President Franklin D. Roosevelt's New Deal, assuming public funds are available and credit markets remain reasonably healthy. If the rebuild occurs, that also suggests promising opportunities for numerous infrastructure-oriented stocks, which I'll review in future blogs.