Inside That Counts UMBLING INFRASTRUCTURE


THE HEFTY COST With such a tall order on a national scale, the price tag must be examined. Estimates of $1 trillion lead to hesitation. President Trump has promoted a partnership to foot the bill, where some of the money will come from private enterprise and some from the US government. Te plan suggests approximately $300 billion from the taxpayers’ coffers, and the rest from private enterprise, which would be earned back in usage fees over time.


Te plan’s intention is to create many construction jobs, enhance heavy machinery sales and manufacturing, and improve our GDP, eventually helping to raise interest rates back to historical norms. If the country can get to three to four percent per year in GDP growth, it would only be a few years until this substantial investment would be returned in the form of additional tax revenue for the government.


THE LIKELIHOOD OF SUCCESS Currently, our President’s agenda is occupied with healthcare. After healthcare, it appears he’ll try to tackle tax reform, creating a simpler code with somewhat lower taxation. Tird in line is the issue of infrastructure.


However, because infrastructure spending would likely be the most popular of these hot topics among democrats, some suggest that President Trump should get to this issue earlier to get more bipartisan support.


THE EFFECT ON YOUR BOTTOM LINE A sizable government expenditure on infrastructure should improve the profitability of a relatively large number of American corporations and, therefore, improve portfolio performance for investors. Should this happen, we anticipate higher interest rates will quickly follow.


However, as the economy improves, debt can become a problem. You may wish to consider securing a fixed rate of payment on debt because higher interest rates will make variable payments increase. Money that investors have lent out to corporations (e. g. a long- term bond) will likely go down in value as interest rates go up.


Ambassador Advisors has already been managing for this likely eventuality by reducing the risk of higher interest rates affecting client portfolios. Te upcoming government expenditure may end up as a benefit for stocks. By filling the portfolio “taco” with ETFs and stocks, we’re aiming to avoid any crumbling.


Like toppings on a taco, the staunch individualism that has made America great will surely lead decision-makers to introduce their own ideas regarding infrastructure improvements. My earnest hope, when all is said and done, is that all sides can work together to at least build a better shell in preparation for the generations to come.


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