Government picks up construction slack

WASHINGTON, Aug. 20 (UPI) -- U.S. government spending on construction is booming, while private spending has dropped, the U.S. Commerce Department said.

Federal, state and local governments are projected to spend a record $300 billion on roads, schools, buildings and bridges in 2008, USA Today reported Wednesday.

Government spending on building projects has risen 7 percent over last year after a jump of 12.4 percent from the year before.

The spending represents a quick reversal in construction trades. In 2005, private construction spending was more than twice what governments spent, hitting a record of $481 billion, the newspaper reported.

And government construction projects tend to have a lasting effect, analysts said.

"Tax rebates peter out. Building a new bridge helps the economy long after the work is done," University of Oregon economist Mark Thoma told USA Today.

Housing starts fell 11 percent in July compared with June but governments are taking up some of the slack.

"You don't want to spend money on fireworks or a monument to the mayor. But, construction projects create a lot of employment. That's what lags in modern recessions," Thoma said to the newspaper.