Consumers Still Spending, $1 Trillion Infrastructure Bill Passed, U.S. Job Growth
In focus this upcoming holiday week, we take a look at current events and trends that we believe are influential in today’s market such as:
- U.S. consumer spending
- $1 trillion infrastructure bill
- U.S. industrial production posts rebound
- Growth in the U.S. job market
Despite Supply Chain and Inflation Worries, U.S. Consumers Spend Big – Anyone who has read or seen the news in the past couple of weeks has no doubt encountered stories about the supply chain crises and inflationary pressures. The coverage has been virtually end-to-end. While issues very much exist, it seems there may be a gap between the perception of the problem and the reality of it. The October retail sales report showed U.S. consumers spending in droves, with sales at retail stores, online sellers, and restaurants rising by 1.7% month-over-month in October, according to the Commerce Department. Sales in most categories are back above pre-pandemic levels. Some of the biggest U.S. retailers, including Walmart, Target, and Home Depot all reported better-than-expected Q3 earnings and also reported that shelves are stocked in anticipation of the holiday shopping season. While there are certainly shortages and tight inventories in some parts of the economy, there is a reasonable counter-argument that a perceived lack of goods and services may be slightly overblown. If the worries and concerns over the supply of goods are greater than the actual scope of the problem, that’s potentially bullish for stocks, in our view.1
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$1 Trillion Infrastructure Bill Becomes Law – President Biden signed the infrastructure bill into law on November 15, which ‘paves’ the way for significant investment in traditional forms of infrastructure, like roads, bridges, the electrical grid, rail, water, and broadband. The $1 trillion price tag represents $550 billion in additional spending above projected federal spending for roads, bridges, etc.3 Even still, this level of spending marks the largest investment in infrastructure in over a decade and should provide modest tailwinds for economic activity and growth. Among the key spending provisions in the bill are:
- $110 billion for roads, bridges, and major projects
- $73 billion to update and expand the power grid
- $66 billion for rail maintenance, modernization, and expansion – most of this money will go to Amtrak
- $65 billion to broadband infrastructure and development
- $55 billion to clean drinking water
- $50 billion to bolster the U.S.’s infrastructure against climate change and cyberattacks
- $42 billion for ports and airports
U.S. Industrial Production Posts Rebound – Activity in factories, mines, and utilities in the U.S. rose at a solid 1.6% month-over-month clip in October, which followed a slowdown in September tied to the rise of the Delta variant. The October reading shows companies working to bring production back up to full capacity, in particular manufacturing jobs. With wages on the rise, the impact of Hurricane Ida on oil and gas production now faded, and Delta cases still trending lower, factories have been able to push production higher. Manufacturing, which is the biggest component of industrial production, rose by 1.2%.4
Underestimating U.S. Job Growth – In a final sign the U.S. economy may be performing a bit better than advertised, the Bureau of Labor Statistics has reported undercounting new job growth in each of the last four months. When June through September revisions were tallied, it totaled 626,000 undercounted jobs – the biggest underestimate in a comparable period dating back to 1979. There has also been a lot made of the “Great Resignation,” which refers to Americans quitting jobs at record rates over the summer. Indeed, workers resigned from 4.4 million jobs in September, according to the Labor Department. But digging a bit deeper into the data reveals some upshots: for one, many of the quits came from low-paid workers who left for higher-paying jobs, and hiring over the same period was much higher than the quits. All in all, the U.S. is actually adding a lot of workers every month (6.5 million hires compared to the 4.4 million quits).5
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If you have $500,000 or more to invest and want to understand how to measure your net worth, download our guide Measuring Your Net Worth.3 Simply click on the link below to get your copy today!6
2 ZIM may amend or rescind the “Measuring Your Net Worth” guide for any reason and at ZIM’s discretion.
3 Wall Street Journal. November 15, 2021. https://www.wsj.com/articles/biden-infrastructure-bill-signing-11636997814?mod=djemRTE_h
4 Federal Reserve. November 16, 2021. https://www.federalreserve.gov/releases/g17/current/default.htm
5 The Washington Post. November 16, 2021. https://www.washingtonpost.com/business/2021/11/16/government-underestimated-job-growth/?mod=djemRTE_h
6 ZIM may amend or rescind the “Measuring Your Net Worth” guide for any reason and at ZIM’s discretion.
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