Even though the pandemic delivered a massive blow to the economy, the Trump and Biden administrations have done a decent job propping it up through government stimulus and quantitative easing. Now, the US GDP is close to pre-pandemic levels, and the labour market is following suit. The stock market has roared to new highs, and the housing market is in a great state.
Another economic announcement was made on Tuesday, and it’s something we’ve been waiting for. The White House announced that the 1 trillion-dollar infrastructure bill was passed in the Senate on a 69-30 vote. Yes, we finally had a bipartisan vote in the Senate. Republican Party Leader Mitch McConnell and 18 other Republicans joined the Democratic party in voting yes for the bill, which aims to rebuild the US’s roads and bridges while expanding broadband and clean energy initiatives. Even though the Democrats had 2.4 trillion dollars in mind, they were able to negotiate with the Republicans for a large package, nonetheless. However, it still needs to go through Congress, where progressive Democrats want a large social policy bill along with the infrastructure deal.
Even with that hurdle yet to come, the S&P 500 and Dow both reached all-time highs in response to the news. The bill is expected to create nearly 700,000 jobs by 2025, which would be a major boost for our recovering economy. Moreover, it addresses the infrastructure problem straight on, while also preparing the US for the future with broadband and climate initiatives. Just recently, we saw the Hernando de Soto Bridge in Memphis, Tennessee on the verge of breaking down and falling into the Mississippi River, so roads and bridges are clearly in need of repair. The key problem with the bill is the massive amount of borrowing that the government needs to do to fund the bill, but the Republicans, who are usually concerned with the deficit, ended up voting for it which means they believe it won’t have that much of an effect? What do you think about the infrastructure bill? Also, keep an eye out for stocks like Caterpillar and Terex who could benefit from the bill.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.