Infrastructure Bill

On November 15th, President Biden signed a $1 trillion+ infrastructure spending bill into law. The bill focuses mostly on traditional infrastructure projects such as roads, bridges and rails that need maintenance and upgrades. Biden’s much larger and more controversial “Build Back Better” proposal for climate/green initiatives has not yet been approved by congress.

Funding is to be allocated over five years toward some of the following projects:

  • $110 billion for roads and bridges
  • $73 billion to update and expand the power grid
  • $65 billion toward rural area broadband infrastructure and development
  • $55 billion toward lead pipe removal for drinking water
  • $39 billion toward public transportation

Continued government spending, absent new taxes, is generally positive for economic growth. America’s economy or gross domestic product (GDP for short) is comprised of Consumer Spending, Business Investment, Government Spending, and the net of Exports less Imports.

Of these economic inputs, consumer spending still represents about 2/3rds of GDP and is by far the largest driver of growth. If this new round of government spending produces subsequent private sector hiring, there ought to be a multiplier effect as consumer spending growth is stimulated through job creation.

 

 

Disclaimer
This material is provided by Schmitt Wealth Advisers for informational purposes only.  It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy or investment product.  Opinions expressed by Schmitt Wealth Advisers are based on economic or market conditions at the time this material was written.  Economies and markets fluctuate.  Actual economic or market events may turn out differently than anticipated.  Facts presented have been obtained from publicly available sources (unless otherwise noted) and are believed to be reliable.  Schmitt Wealth Advisers, however, cannot guarantee the accuracy or completeness of such information.  Past performance may not be indicative of future results.

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