It has certainly been an interesting year for the United States in so many ways. Washington, D.C. has pushed more money into our economy than we could have imagined. The various stimulus packages as part of COVID-19 relief, combined with pent up demand for all sorts of durable goods and services, record low interest rates and limited labor supply mixed in with supply chain disruptions. This has created a financial landscape we have not experienced before, and the result thus far has been a growing economy but with levels of inflation we have not seen since the beginning of Ronald Reagan’s first term.
Despite inflationary pressures, 2022 will be another year of record spending. On November 15, 2021, President Biden signed into law the long awaited $1.2 trillion infrastructure bill. Massive infusions of spending on roads, bridges, public transit systems, power and water systems, and other projects will create record opportunities for construction companies. It is expected that these funds will start flowing during the first half of 2022.
The Build Back Better bill currently being negotiated in Congress is yet another $1 trillion dollar plus program which has nothing to do with building. It is a broad-based spending plan supposedly focused on social programs. Although the president claimed the additional spending would be completely offset by tax increases on the rich as well as increased enforcement by the IRS, the congressional budget office has shown that to be a myth.
Although many construction companies are surely looking forward to the opportunities related to the infrastructure bill, a cautious eye should be kept on continued government spending and the related inflationary pressures. Inflation can affect prices in all areas but of particular interest to construction companies is rapidly rising costs for materials and labor.
We are fortunate that our economy continues to grow and there is much to look forward to in 2022 and beyond. Our hope for the New Year is that our leaders in Washington, D.C. will put politics aside and make choices that are best for the country.
Direct Advisors, LLC, established in 2001 and located in Albany, New York, provides bona fide benefit plan consulting and third-party administrative services to merit shop (non-union) construction companies that are subject to the Davis-Bacon Act and state prevailing wage regulations. Our clients are located throughout the United States.
Author: Jeff Bennett