November 22, 2021
House Democrats waited for the numbers compiled by the Congressional Budget Office and they were satisfied with the final report. The “Build Back Better” Act is projected to spend $2.43 trillion over the next decade (2022-2031), offset by $2.27 trillion of new taxes, producing an estimated deficit increase of $160 billion. (source: CBO).
President Joe Biden is expected this week to nominate Jerome Powell for a 2nd term as chair of the Federal Reserve or tap Lael Brainard to the top spot. Powell, on the job since 2/05/18, has overseen the nation’s central bank during the pandemic, coordinating a series of stimulus programs that kept money flowing throughout our economy. During his nearly 4-years as Fed chair, the S&P 500 has gone from 2649 to 4698, an annualized return of +17.1% (total return) (source: BTN Research).
Whoever is running the Fed next year, their biggest challenge will be when to start raising interest rates. Wait too long to begin raising rates, and the Fed risks letting the economy overheat, forcing them to play catch-up with its rate hikes. Start the rate hikes too soon, and the Fed risks stalling our recovering economy (source: BTN Research).
Notable Numbers
WHEN THE FED LAST RAISED RATES – Between 12/14/16 and 12/19/18, the Fed raised short-term interest rates 8 times (0.25 percentage points each time). Between 12/14/16 and 12/19/18, the S&P 500 increased +15.8% (total return) in aggregate over the 2-years (source: BTN Research).
NEW TAXES IN THE BILL – HR # 5376, aka “The Build Back Better Act,” is estimated to raise taxes on the top 1% of US taxpayers and lower taxes on the other 99% of taxpayers. The top 1% of taxpayers, approximately 4 million tax returns, would see an average annual federal tax increase of $54,360 (source: Tax Policy Center).
AT LEAST A FEW DAYS AT HOME – 25% of 2,050 full-time workers surveyed in September 2021 say they would quit their job if their employer completely eliminated the “work-from-home” option in a post-pandemic world (source: 2021 State of Remote Work).
THAT’S NOT NORMAL – The average home in the United States has appreciated +23.4% in the 17 months from 3/31/20 (as the pandemic was beginning) to 8/31/21. For the 8 “Mountain” states tracked (Montana, Idaho, Wyoming, Nevada, Utah, Colorado, Arizona and New Mexico), the average price increase over the 17 months has been +30.9% (source: Federal Housing Finance Agency).
