While there may have been a few bumps in the road, last week finally saw Congress pass a $1.2 trillion infrastructure bill, which has been at the forefront of Joe Biden’s Presidential campaign last year.
This number was something of a compromise in the end, after initial pressure on more conservative Democrats (such as Krysten Sinema of Arizona and Joe Manchin of West Virginia) to meet the more progressive caucus near the $2 trillion mark.
But how did the final Congress vote go, and what will the infrastructure bill mean for the US economy as a whole?
A Look at the Infrastructure Bill and Congress Vote
As you can imagine, the internal negotiations about the infrastructure bill were painstaking at times, but this should come as no surprise given that this will represent the largest investment of its type ever in the US.
Ultimately, the final vote in Congress was 228-206, with the vast majority of Democrats and 13 Republicans agreeing to the $1.2 trillion bills and just six Republicans hedging against it.
The passing of the bill will now head to Joe Biden’s desk to sign the law, which will come as something of a relief to a President who had witnessed continued delays and debate among Democrats throughout Friday.
Make no mistake; this was a central pillar of Biden’s Presidential campaign, but while the initial legislation passed the Senate back in August, it stalled in the House as Democrats attempted to negotiate an additional $1.2 trillion economic package that’s tied to the infrastructure bill.
But what will be included in the bill? Well, the Congress-passed last week will provide $550 billion of new federal investments in America’s infrastructure over the course of the next five years, with much of this capital likely to be invested in bridges, roads, rail, mass transit airports, and waterways.
In total, a $65 billion investment will immediately be made in improving the nation’s broadband infrastructure, while a further $7.5 billion would go towards building a nationwide network of plug-in electric vehicle traders as part of a broader automotive revolution.
How Will This Impact the Economy and the Markets?
From an economic perspective, there’s no doubt that an infrastructure investment that improves ports and airports will enhance America’s capacity for seamless international trade, modernizing the region’s import and export performance in the process.
According to the most recent GDP data, it has arguably come at the ideal time, with China’s economy poised to supersede that of the US sooner than expected.
More specifically, the latest reports show that the total US GDP fell by 2.3% through 2020 and against the backdrop of the coronavirus, while China’s grew by an impressive 2.3% during the same period.
From an investor perspective, the passing of the bill will have had an immediate impact on those who trade forex, with the US dollar strengthening on the promise of near and medium-term economic growth.
Similarly, the so-called “PAVE Infrastructure ETF” rallied immediately after the bill was passed, and despite a slight, subsequent decline, it has outperformed the prestigious S&P 500 and climbed by more than 35% this year.
It undoubtedly offers an excellent way to gain exposure in the current climate, mainly as this trend shows no sign of abating any time soon.
