{"id":9961,"date":"2021-11-04T17:22:13","date_gmt":"2021-11-04T17:22:13","guid":{"rendered":"https:\/\/zackspcg.com\/blog\/?p=9961"},"modified":"2022-02-26T13:05:37","modified_gmt":"2022-02-26T13:05:37","slug":"how-will-the-two-proposed-bills-affect-the-market-and-economy-if-passed","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/how-will-the-two-proposed-bills-affect-the-market-and-economy-if-passed\/","title":{"rendered":"How Will the Two Proposed Bills Affect the Market and Economy if Passed?"},"content":{"rendered":"\n

Tim R. from Little\nRock, AR asks: <\/em>Good afternoon, Mitch, I\u2019d like to hear your thoughts on the\nbig-spending bills moving through Congress now. What do you think the impact\nwill be on growth, the stock market, and inflation? Thank you.<\/p>\n\n\n\n

Mitch\u2019s Response:<\/strong><\/p>\n\n\n\n

Thanks for emailing, Tim. There are two major spending\npackages to weigh in answering your question, the $1 trillion infrastructure\nbill and the $1.85 climate and social-spending bill. Interestingly enough, the\ninitial price tag estimate for the latter bill was $3.5 trillion, which ended\nup being higher than the total overall spending we\u2019re likely to see from both\npackages combined. It\u2019s an old lesson in politics \u2013 focus on what is done, not on\nwhat is said.1<\/sup><\/p>\n\n\n\n

The short answer to your question, in my view, is that we\nshould not see a significant impact on growth, the market, or inflation. The\nspending bills are large, but much of the money will be deployed over years and\nyears \u2013 not all at once. Another factor to consider is that the spending will\nbe spread across various sectors and industries, meaning there will not be one\nmajor winner when the bills are signed into law. <\/p>\n\n\n\n

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On the infrastructure front, we could see some tailwinds for\nthe Industrials and Materials sectors, as the bill includes $110 billion for\nroads, bridges, and other major projects combined with $39 billion for public\ntransit and $66 billion for rail maintenance and expansion (mostly for Amtrak).\nThere could also be a boost in select metals as about $15 billion will go\ntowards electric vehicles (EV) and EV infrastructure. Telecom and Utilities\ncould see a boost as well, as $65 billion will go towards broadband\ninfrastructure and $73 billion will to updating and expanding the power grid.<\/p>\n\n\n\n

As for the $1.85 trillion climate and social-spending bill,\na big portion of the spending will go to temporarily expand the child tax\ncredit (for another year), sending funding to states to set up universal pre-K\nprograms, and over $100 billion to states for child care spending (for low-income\nfamilies at first, but then expanded to higher-income families after three\nyears. On the climate front, the biggest expense is for a series of tax credits\nthat incentivize reducing carbon emissions. <\/p>\n\n\n\n

The trillion-plus dollar figures being thrown around may\nseem like they would have major implications for growth, the stock market, and\ninflation, but I do not see them as having a big, outsized impact. Because the\nspending is spread out over several sectors and years, I believe we will see a\nmodest tailwind to growth which should support the stock market but not\nfundamentally alter the trajectory of the economic expansion.<\/p>\n\n\n\n

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There has been a lot of hype\u2014and a lot of criticism\u2014over the proposed big spending bills. But what will be their true impact?<\/p>\n","protected":false},"author":3,"featured_media":7426,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[66,71],"tags":[],"class_list":["post-9961","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mitchs-mailbox","category-private-client-group"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/9961","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=9961"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/9961\/revisions"}],"predecessor-version":[{"id":10269,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/9961\/revisions\/10269"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=9961"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=9961"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=9961"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}