I hope you're warm, well, and looking forward to some time with family and friends. I wanted to drop you a quick note about a couple of things: infrastructure, inflation, and taxes.
President Biden signed his much-debated bipartisan infrastructure deal.
What does that mean for the economy?
In the short term, some of the infrastructure funding will go immediately toward clearing port and transportation bottlenecks, so that might help improve supply chain issues. (1) Fingers crossed.
Though it could be years before you or I drive across a new bridge or highway funded by the bill, some of the maintenance funds could get used in spring construction blitzes. (2)
Since the job market is already tight, the economy isn't likely to see an immediate surge in hiring due to infrastructure spending; however, multiple reports suggest ~800,000 new jobs could be added by 2030, though many of them will be temporary rather than long-term jobs.
Economists don't think inflation is likely to increase due to the slow pace of spending, though the deal is projected to add $256 billion to the federal budget deficit over the next 10 years.
Personally, I take any economic forecasts with a HUGE grain of salt, as there are just too many variables to accurately predict what's going to happen in the next year, much less 10 years out.
Bottom line, analysts project long-term benefits to the economy in lower business costs, increased labor force participation, and improved competitiveness. (3)
Inflation might not be as temporary as the Federal Reserve would like it to be.
Prices are up all over, and folks are understandably upset at paying more at the grocery store, gas station, and most everywhere else.
Many analysts hoped that data blips, supply chain clogs, and other pandemic-related disruptions were creating a temporary spike in inflation that would resolve soon. (4) However, inflation has remained stubbornly high.
