The collapse of US infrastructure spending, charted The chart is from a new note by economists at BCA Research, who add: In the five and ten years ended 2012, real government non-defense investment in structures declined at annualized rates of 3.3% and 2.4% respectively (Chart 6). We include state and local governments in this measure because they account for three-quarters of government non-defense capital spending, heavily financed by federal grants. There are reasonable debates to be had about the necessity (or non-necessity) of making credible commitments to future fiscal consolidation. We're not convinced they should be a top priority right now, but such commitments can be useful. They help reinforce the case for stimulative fiscal policy in recessions or weak recoveries - and if you prefer a wonky perspective, try Caballero & Farhi's claim that they also bolster the government's capacity for safe asset issuance. Fine. But that's different from arguing that tax and spending policies right now should focus on, or even care about, reducing the budget deficit. And there's a good chance that we'll look back with regret at the tightening represented in the chart above, which has taken place during a time when interest rates have been scraping the ground. It's also likely that much of the investment that has been forgone in the name of fiscal consolidation will have to be made eventually anyways - only it will be made when rates are higher, exacerbating the long-term fiscal outlook rather than improving it. Related link: Healthcare costs and the debt - FT Alphaville