Inflation Threatens to Erode Impact of $1 Trillion Infrastructure Law

Rising prices and snarled supply chains are poised to blunt the impact of the $1 trillion infrastructure law Congress passed with bipartisan support last year.

How many roads, bridges, railways, fiber optic lines and other types of infrastructure the U.S. can build or fix under the law—a central accomplishment of President Biden’s that experts say is a generational investment—will largely hinge on the extent of increases in everything from the cost of diesel fuel to workers’ wages.

Elevated costs for materials and labor are already pushing contractors to charge more for construction projects, government data show, increases that economists and industry officials say could reduce the number of infrastructure projects the new federal money can finance. State and local officials facing higher prices may give priority to easier, less ambitious projects, and some worry that a rush of government spending could exacerbate inflation in the industry.

“As the cost of materials for these projects goes up, there are going to be fewer projects that you’re able to do,” said Jim Tymon, executive director of the American Association of State Highway and Transportation Officials. “All of those factors are going to have an impact on just how far this influx of new federal funding is going to go in addressing our infrastructure problems.”