Highlights from Congress’ latest spending bill — points impacting the economy and your portfolio

The central theses

  • December’s spending law authorized the government to spend more than $1.7 trillion
  • The posts were as diverse as helping Ukraine and reforming election supervision
  • The bill also avoided a costly closure

In December, Congress passed a sweeping spending bill that authorized more than $1.7 trillion in spending on various programs across the country.

US government spending accounts for a significant portion of the country’s economic activity and can have a major impact on the economy and the stock market. It’s important for investors to keep track of these big spending bills and how they might impact your portfolio.

If you want to invest in companies affected by government spending without having to do all the research yourself, consider Q.ai’s Infrastructure Spending Investment Kit. Download the app to check this.

The December Omnibus Expenditure Account

The December spending bill included appropriations for a variety of purposes.

Ukraine

One of the key items in the spending bill was $45 billion earmarked to support Ukraine in its ongoing war against Russia.

Of that $45 billion, $9 billion will go to the Ukrainian military to pay for training, weapons, logistics, and salaries, and $12 billion will be used to replenish the US stockpile of military equipment that has already been sent to Ukraine.

The remaining money is used for economic support of the Ukrainian government, humanitarian and infrastructure purposes, as well as operations of the European command.

Given that a large chunk of these funds will be used to increase US inventories, this could be a boon for domestic military companies and manufacturers.

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Election Counting Act

The bill also included language clarifying the vice president’s role in confirming the results of the presidential election. It also provides the FBI with $11.3 billion to investigate domestic terrorism.

This could help stabilize the economy by easing fears of future unrest during the elections.

nutritional assistance

The bill provides for a permanent, statewide summer EBT program that will begin in the summer of 2024. This program offers $40 per month to families with children who receive meal assistance at school. It also relaxes the rules for rural children getting summer meals.

This funding will help families in need afford groceries and can help increase sales for companies that provide food to these communities.

tick tock

With the passage of the bill, Chinese video app TikTok was banned from government devices. This comes after some government officials raised concerns that the app could be used to collect personal information from Americans or for propaganda purposes.

Investors in ByteDance, the developer of TikTok, may fear this is the first step in a nationwide crackdown on the popular app.

Medicaid

The spending bill eliminates a pandemic-era rule that prohibited states from opting out of Medicaid recipients, a rule that allowed Medicaid to hit a record 90 million enrollments.

States can start ending coverage as early as April 1, 2023, and experts estimate as many as 19 million could lose their benefits. While many cannot afford other insurance coverage, some are turning to private insurance, which could increase insurers’ bottom lines.

college aid

Federal Pell Grants, a college grant that offers money to low-income students, will get a boost. The maximum reward increases by $500 to a total of $7,395.

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childcare

The Child Care and Development Block Grant will be increased by 30%. Head Start, another child-rearing program, will also get a big $8.6 billion funding boost.

environmental Protection

The bill also provides $576 million in additional funding for the Environmental Protection Agency, bringing its total budget to just over $10 billion. The National Park Service will see a 6.4% increase, allowing it to rehire 500 of the 3,000 employees it has shed over the past decade.

Funding here could help the EPA improve environmental regulation and oversight, which could result in fines for companies violating environmental regulations. This provision could also encourage visits to the country’s national parks.

shutdown averted

Another key note for investors is that passing a spending bill means the US has avoided a government shutdown. These closures occur when the government has failed to approve a spending bill, forcing government offices and services to close.

This can have a massive impact on the economy. For example, Standard & Poor’s estimated that the 2013 shutdown, which lasted 16 days, cost the US economy $24 billion and reduced GDP growth by 0.6%.

Avoiding a shutdown is good news for investors.

What the bill means for investors

Investors should keep a close eye on any major government spending bill. The US government spends more than $1 trillion each year, which is a significant fraction of the country’s GDP. That means big changes in how the government spends its money could have an impact on the economy and the stock market.

By and large, this spending bill contained no unexpected shocks or major changes. That means investors don’t have to worry too much about the shock waves of bill spending through the market. However, there are a few things to consider.

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One of them is the commitment to continue helping Ukraine. The United States seems intent on continuing to spend money on guns and other military aid to send to Europe. This could be good news for weapons manufacturers, logistics companies, and other companies that work closely with the military.

Also of note is the TikTok ban on federal devices. Legislators have increasingly voiced concerns about the app. Investors in Chinese tech companies may fear that the government will take further action to ban these companies from the US market over security concerns.

The final result

US government spending bills allow for huge spending in the domestic economy. It’s important for investors to keep track of how the government is spending its trillions of dollars because that spending can have a major impact on the stock market.

If you’re looking to invest in US government infrastructure spending without tracking which industries are impacted, consider Q.ai’s Infrastructure Spending Investment Kit. This AI-monitored mix of 156 companies benefiting directly or indirectly from the recently passed Omnibus Spending Act.

Download Q.ai today for access to AI-supported investment strategies.

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