On the Minds of Investors

What does a C grade on U.S. infrastructure mean for investors?

Aaron Mulvihill

Global Market Strategist

Published: 4 days ago
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The American Society of Civil Engineers (ASCE) has just released its 2025 Report Card for America's Infrastructure, highlighting a critical national need but also a significant opportunity for investors seeking portfolio diversification.

Founded in 1852, the ASCE is the oldest national civil engineering organization in the United States, representing over 160,000 engineers. Beginning in 1988, every four years, the organization has published a "Report Card" that evaluates the state of U.S. infrastructure across 18 categories, using an elementary-school-style grading system.

The nation’s overall infrastructure grade this year modestly improved to a C, up from a C- in 2021. This progress was helped by stimulus from the 2021 Infrastructure Investment and Jobs Act (IIJA) and the 2022 Inflation Reduction Act (IRA), along with a significant influx of private funding into infrastructure projects.

While transportation and water infrastructure show improvements, the energy sector has slipped to a D+, raising concerns about capacity and future demands. With electricity consumption surging due to the adoption of electric vehicles and the demands of data centers, the need for power grid upgrades is urgent. As utilities work to double transmission capacity and incorporate renewable energy sources, private investment is crucial to drive innovation and enhance the reliability of the nation's power grid.

The ASCE projects $5.4 trillion in public and private investment flows from 2024 through 2033, based on current funding plans. However, this still leaves a substantial gap in achieving a B rating, or a state of "good repair," across all infrastructure categories. The organization estimates a $3.7 trillion funding shortfall over the next decade, which could widen significantly if Congress reduces funding from existing federal programs.

For investors, this persistent infrastructure gap presents compelling opportunities for several reasons:

Essential, non-cyclical assets: Infrastructure provides vital services that remain in demand regardless of economic conditions, offering stability that can counterbalance volatility in traditional financial markets.

Public-Private partnership potential: The report advocates for expanded use of public-private partnerships and additional financing tools, creating avenues for private capital to participate in infrastructure development.

Inflation protection: Infrastructure like public utilities are effective inflation hedges, as they pass on cost increases to rate-payers to ensure investors are paid a stable return on investment. For investors concerned about inflation eroding their spending power, this can be a significant advantage.

Energy transition opportunities: With energy receiving a concerning D+ rating (down from a C- in 2021), there is renewed urgency for investment in generation, transmission and distribution, creating opportunities for private investors.

The ASCE's report serves as a timely reminder of the essential role infrastructure plays in the economy and the opportunities it presents for long-term investors. Amid volatile public markets, infrastructure investments can offer more stable and predictable returns. While the C grade reflects the ongoing challenge in maintaining and improving the country’s infrastructure, it also highlights the progress made and the potential for future investment. 

The ASCE projects $5.4 trillion in public and private investment flows from 2024 through 2033, based on current funding plans. However, this still leaves a substantial gap in achieving a B rating, or a state of "good repair," across all infrastructure categories.

The American Society of Civil Engineers (ASCE) has just released its 2025 Report Card for America's Infrastructure, highlighting a critical national need but also a significant opportunity for investors seeking portfolio diversification.

Founded in 1852, the ASCE is the oldest national civil engineering organization in the United States, representing over 160,000 engineers. Beginning in 1988, every four years, the organization has published a "Report Card" that evaluates the state of U.S. infrastructure across 18 categories, using an elementary-school-style grading system.

The nation’s overall infrastructure grade this year modestly improved to a C, up from a C- in 2021. This progress was helped by stimulus from the 2021 Infrastructure Investment and Jobs Act (IIJA) and the 2022 Inflation Reduction Act (IRA), along with a significant influx of private funding into infrastructure projects.

While transportation and water infrastructure show improvements, the energy sector has slipped to a D+, raising concerns about capacity and future demands. With electricity consumption surging due to the adoption of electric vehicles and the demands of data centers, the need for power grid upgrades is urgent. As utilities work to double transmission capacity and incorporate renewable energy sources, private investment is crucial to drive innovation and enhance the reliability of the nation's power grid.

The ASCE projects $5.4 trillion in public and private investment flows from 2024 through 2033, based on current funding plans. However, this still leaves a substantial gap in achieving a B rating, or a state of "good repair," across all infrastructure categories. The organization estimates a $3.7 trillion funding shortfall over the next decade, which could widen significantly if Congress reduces funding from existing federal programs.

For investors, this persistent infrastructure gap presents compelling opportunities for several reasons:

  1. Essential, non-cyclical assets: Infrastructure provides vital services that remain in demand regardless of economic conditions, offering stability that can counterbalance volatility in traditional financial markets.
  2. Public-private partnership potential: The report advocates for expanded use of public-private partnerships and additional financing tools, creating avenues for private capital to participate in infrastructure development.
  3. Inflation protection: Infrastructure like public utilities are effective inflation hedges, as they pass on cost increases to rate-payers to ensure investors are paid a stable return on investment. For investors concerned about inflation eroding their spending power, this can be a significant advantage.
  4. Energy transition opportunities: With energy receiving a concerning D+ rating (down from a C- in 2021), there is renewed urgency for investment in generation, transmission and distribution, creating opportunities for private investors.

The ASCE's report serves as a timely reminder of the essential role infrastructure plays in the economy and the opportunities it presents for long-term investors. Amid volatile public markets, infrastructure investments can offer more stable and predictable returns. While the C grade reflects the ongoing challenge in maintaining and improving the country’s infrastructure, it also highlights the progress made and the potential for future investment. 

U.S. infrastructure funding gap*

USD billions, as of 2024

USD billions, as of 2024

Source: American Society of Civil Engineers, J.P. Morgan Asset Management.

Categories are established by the ASCE in the March 2025 “A Comprehensive Assessment of America’s Infrastructure: 2025 Report Card for America’s Infrastructure” report. *Funding gap is defined as the amount of investment needed from 2024-2033 in excess of the amount that is currently in place by U.S. law. Funded figures assume investments continue at current legislative appropriations throughout the period. The funding amount needed is to get each category to a “B” rating, or a state of “Good” repair, as defined by the ASCE. **Water includes dams, drinking water,  inland waterways & ports, levees and wastewater & stormwater categories. ***Transit includes bridges, rail and transit categories.

Data are based on availability as of March 25, 2025.

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Aaron Mulvihill

Global Market Strategist

Published: 4 days ago
Listen now
00:00

The American Society of Civil Engineers (ASCE) has just released its 2025 Report Card for America's Infrastructure, highlighting a critical national need but also a significant opportunity for investors seeking portfolio diversification.

Founded in 1852, the ASCE is the oldest national civil engineering organization in the United States, representing over 160,000 engineers. Beginning in 1988, every four years, the organization has published a "Report Card" that evaluates the state of U.S. infrastructure across 18 categories, using an elementary-school-style grading system.

The nation’s overall infrastructure grade this year modestly improved to a C, up from a C- in 2021. This progress was helped by stimulus from the 2021 Infrastructure Investment and Jobs Act (IIJA) and the 2022 Inflation Reduction Act (IRA), along with a significant influx of private funding into infrastructure projects.

While transportation and water infrastructure show improvements, the energy sector has slipped to a D+, raising concerns about capacity and future demands. With electricity consumption surging due to the adoption of electric vehicles and the demands of data centers, the need for power grid upgrades is urgent. As utilities work to double transmission capacity and incorporate renewable energy sources, private investment is crucial to drive innovation and enhance the reliability of the nation's power grid.

The ASCE projects $5.4 trillion in public and private investment flows from 2024 through 2033, based on current funding plans. However, this still leaves a substantial gap in achieving a B rating, or a state of "good repair," across all infrastructure categories. The organization estimates a $3.7 trillion funding shortfall over the next decade, which could widen significantly if Congress reduces funding from existing federal programs.

For investors, this persistent infrastructure gap presents compelling opportunities for several reasons:

Essential, non-cyclical assets: Infrastructure provides vital services that remain in demand regardless of economic conditions, offering stability that can counterbalance volatility in traditional financial markets.

Public-Private partnership potential: The report advocates for expanded use of public-private partnerships and additional financing tools, creating avenues for private capital to participate in infrastructure development.

Inflation protection: Infrastructure like public utilities are effective inflation hedges, as they pass on cost increases to rate-payers to ensure investors are paid a stable return on investment. For investors concerned about inflation eroding their spending power, this can be a significant advantage.

Energy transition opportunities: With energy receiving a concerning D+ rating (down from a C- in 2021), there is renewed urgency for investment in generation, transmission and distribution, creating opportunities for private investors.

The ASCE's report serves as a timely reminder of the essential role infrastructure plays in the economy and the opportunities it presents for long-term investors. Amid volatile public markets, infrastructure investments can offer more stable and predictable returns. While the C grade reflects the ongoing challenge in maintaining and improving the country’s infrastructure, it also highlights the progress made and the potential for future investment.