Public investment in highway, street, and bridge construction is expected to fall to $78.5 billion compared to 2010's estimated $82.2 billion level, according to the forecast from Alison Black, ARTBA's vice president of policy and senior economist.

On the positive side, Black noted that the amount of work completed on bridges is expected to increase to $25.4 billion this year. The value of real work in the bridge market has nearly doubled in the last decade as state and local governments have increasingly addressed long-deteriorating conditions.

Black said the recovery act had a positive impact on the market this year. But state and local governments continue to struggle with the current economic situation and in the aftermath of the recession.

"Although state and local investment typically accounts for 57% of the value of construction work, this percentage fluctuates -- and the state and local market share will often decline after a recession," Black said in her forecast. "States also tend to hold back on larger projects and simply maintain their programs until they know the new transportation funding levels from the federal government."

Nevertheless, individual state highway and bridge programs will show growth next year, although it will be uneven, she predicted. There are 23 states that increased their contract awards during federal Fiscal Year 2010, which ended Sept. 30, according to an ARTBA analysis of contract award data from McGraw Hill. Although some of these states have seen program declines over the last few years, the increase in contract awards is one positive indicator of state level market activity in 2011.

The model used in the ARTBA forecast takes into account current economic conditions, state and local funding, and federal investment. It assumes that there is no major increase in federal investment over the next five years. The model also uses the projected Highway Trust Fund outlays from the Congressional Budget Office for future federal investment. It assumes that the United States will return to modest economic growth of between 1.8% and 1.9% for 2011-15. Increases in material prices and project costs are expected to be in line with general inflation at about 2%.

According to ARTBA, the market outlook would change if either federal, state, or local governments provided significant increases in their current investment levels.

ARTBA's forecast also mentioned that the real value of work done on airport runways is expected to fall 10% to $5.3 billion. Flat funding for the Airport Improvement Program and continued failure by Congress to pass a new aviation reauthorization bill are key reasons for the reduction. The airport runway market also benefited from increased recovery act spending in 2009 and 2010.

Finally, the real value of transit and rail work is forecasted to drop slightly from $15.3 billion in 2010 to $14.9 billion in 2011. The longer term outlook for this sector will depend on federal investment through the New Starts program, private rail investment, and the general state of the U.S. economy, Black said.