With continued uncertainty surrounding the economy, the public sector continues to be an attractive hedge for contractors looking to diversify their work with a more consistent revenue stream. 2023 is expected to see the beginning effects of the passage of the Infrastructure Investment and Jobs Act, also known as the Bipartisan Infrastructure Law (BIL), which creates $1.2 trillion in funds and $550 billion in new investments over the next five years. This nearly doubles federal investment in new and existing programs, including roads, bridges, rail, highway and pedestrian safety, public transit, as well as several other sectors. As a result, it is projected that construction spending in the United States will grow 5.5% in 2023.
Material sourcing and price increases continue to be a main source of challenge for the construction market navigating the supply chain bottlenecks as a result of Covid. Some public agencies have begun to respond in contracts to address these potential issues, but continues to be an area to review and consider logistics ahead of pursuing a project, to avoid as much uncertainty in cost increases and project delays as possible.
At 126 months, the U.S. is in its longest economic expansion in history, breaking the record of 120 months of economic growth from March 1991 to March 2001. The surety industry has closely followed this run with a trend of profitable years, as surety losses have remained relatively low. As the surety industry has progressed through this profitable run, we continue to monitor how surety companies evaluate construction companies for their surety programs and terms they offer, to keep our clients in the most favorable position for growth.
With cost increases experienced both in material and labor, tied to increased spending available for further growth in the public sector, surety capacity has been an area of challenge for many commercial construction companies, whether entering the public sector for the first time, or having been in the market for years but continuing see contract amounts increase as a result of these costs rising. Newfront helps to navigate that challenge, by utilizing our local expertise and partnering with local surety carriers to assist with that growth.
The market is ever evolving and we, at Newfront, are experts and can help you navigate challenging times and opportunities. We are here to answer all of your questions and to help guide you through all of your insurance needs.
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