This month we look at President Biden’s Infrastructure plan and how stimulus packages, specifically Infrastructure spending, may impact your wealth.

We share this month’s recommended reading and listening from Mark and Aidan shares a book he could not put down!

Richard shares his journey from grassroots football to becoming a financial planner and it’s confirmed… Aimee Pratt is heading to Tokyo for the Olympics!

Biden’s Infrastructure Plan

Throughout the coronavirus pandemic, the US has seen several stimulus packages to support the American population specifically in relation to the pandemic.

Moving forward, Biden looks to provide support past surviving the pandemic and focusing on rebuilding the US economy while being aware of inflationary concerns.

On the 31st March, President Biden proposed the initial American Jobs Plan (AJP), a $2.3 Trillion stimulus package focusing on creating new jobs through:

 Physical Infrastructure e.g. transportation that includes airports, electric vehicle charging stations, waterways, etc.,

 Infrastructure ‘At Home’ focusing on building and retrofitting 2 million homes, modernising drinking water, wastewater, and stormwater systems, delivering high-speed broadband coverage.

Research and development, which would include a primary focus on clean energy and basic climate research and semiconductor research.

“Care economy” to expand access to home or community-based care for seniors and people with disabilities.

Believing the $2.3 Trillion package was excessive, the Republican party offered a counterproposal in the region of $600 billion, which led to further discussions between the Republican Party and Democratic Party with a bipartisan group coming together to agree on a $304 Billion package specifically for U.S. highway funding with various other bipartisan and Democratic-led bills addressing the separate elements of the original proposal looking to be agreed or pushed through via reconciliation.

The reconciliation process is a special process that makes it easier for legislation to pass the Senate, side-stepping typical congressional hold-ups specifically for tax, spending, and debt-limit bills. The process can be undertaken only if the House and Senate agree on a budget resolution that includes a “reconciliation directive”. As the Senate is split 50-50 down party lines and Vice President Kamala Harris holds the tie-breaking vote, reconciliation allows the Democrats to land a tax and spending bill on Biden’s desk without any Republican support.

In theory, Biden’s approach to creating new jobs through infrastructure sounds appealing, in practice, the reality may be very different.

If we review similar previous stimulus packages and analyse the impacts what do we see?

In 2009, President Barack Obama signed a similar infrastructure-based stimulus bill. A 2012 analysis of the stimulus package showed the American Recovery and Reinvestment Act (ARRA) showed an increase in public sector employment over the initial 24-month period following the program’s inception to be between 156,000 to 563,000 while private sector employment ranged from a loss of 182,000 to a gain of 1,095,000 jobs.

What does this mean for you?

As mentioned in our previous newsletter, providing security and protecting wealth against inflationary risk is a primary focus for many individuals and households.

A recent study by Wurstbauer and Schafers (2015) shows direct infrastructure investments exhibiting desirable long-term inflation protection characteristics.

For Daintree clients, we will be reviewing potential globally diversified, infrastructure funds which are most likely to provide long-term protection for the coming years.

Learning corner

This month Mark shares what he read and listened to throughout June, click here to see!

Similarly, Aidan shares his learnings from The Four Agreements by Don Miguel Ruiz, to read more click here.

Richard’s podcast & Aimee is heading to Tokyo

Last month, Richard sat down with Athlete Culture to share his journey from grassroots football to joining Daintree as a financial planner.

On the 26th June, it was confirmed Aimee Pratt is heading to Tokyo for the Olympic games!

Everyone at Daintree is incredibly proud of Aimee and the efforts of Diane Modahl Sports Foundation.

To learn more about Aimee’s journey, click here.