This Tuesday, the 10th, US Senate Approves new infrastructure package that will inject $1 trillion into the US economy. This is the largest public investment in decades and will be directed towards civil construction such as bridges, highways, ports, airports and broadband internet. Half of the project’s value, that is, $550 billion, will be financed by new loans, and the other half will come from resources that have already been approved and are stuck, for example, in other financing programs.
With 30 votes in favor and 30 votes against in the Senate, this was possible thanks to a bipartisan coalition between Democrats and Republicans, showing a great capacity for political expression in Congress by the Democratic President, Joe Biden. “The margin through which the package passed is impressive and this explains the fact that Washington manages to negotiate beneficially for the country. It eases the polarized mood”, says Alejandro Ortiz, an economist at Guida Investmentos. Huh. The program will now be directed to the House of Representatives, where it is taken up for approval.
In addition to being able to organize massive vaccination campaigns in a country with a low capillary of public positions – unlike Brazil, which has basic health units spread across all municipalities – the US president had already shown an ability to deal with the crisis. Congress passed another package in March, worth $1.9 trillion.
The great merit of the infrastructure package is the creation of jobs, one of the main factors of concern for the full economic recovery of the United States after the COVID-19 crisis. Although economic activity is recovering, employment remains below pre-pandemic levels, payrolls released last week showed.
Furthermore, the analysis is that in the short term, a trillion-dollar injection into the economy would benefit stock exchanges and long-term interest rates, but could put further pressure on inflation. The good news is that the trend will reverse in the long run. “The infrastructure package is a motivator of the productivity of the economy, which is a deflationary phenomenon. In the medium term, the pressure on prices will certainly ease”, says Ortiz.
