The small August decline in heavy construction spending continues an 8-10 month cutback period in this market with the decline in spending reaching 3-4% by next spring, about 5-7% after adjusting for rising project costs. Private facility investment has recently begun to decline under stress from reduced capacity needs during the recession. This decline will accelerate over the next year, especially for power projects where starts have dropped by nearly half.

The impact of the recession on heavy project construction spending will be dampened by the federal pump-priming supplements to public works budgets less a negative offset from the collapse of the federal Highway Trust Fund financing system.