Now that President Barack Obama’s gargantuan stimulus package has passed and become law, does this mean that infrastructure sector and its exchange traded funds (ETFs) will see a rapid boom?
Probably not. While the influx of funds will eventually assist the sector, it effect won’t be immediate. The government has the reputation of moving as slow as molasses, and this case will most likely be no different. For construction projects, the time table and process to be approved is lengthy. First, one must advertise for contractors, then collect bids, review and check the bids, pick a winner and then get the ball rolling. In general, it takes about three months from when a project is accepted to when the shovels get moving, states Michael Phillips of The Wall Street Journal.
On the other hand, the Obama administration knows that they have to put hard hats on American streets quickly, to preserve their credibility, get the nation’s economy rolling and keep unemployment rates down.
All we can do is hope that the administration breaks the traditional bureaucratic lag and doesn’t allow red tape to postpone infrastructure projects.
An ETF to take a look at is the SPDR FTSE/Macquarie Global Infrastructure 100 (GII), which is down 18.9% year to date. Although this is a global ETF, it has a 39.5% weighting in the United States.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.