Moody's: Infrastructure = economic growth

Ahead of today’s expected cloture vote, wanted to be sure you saw the latest report from Moody’s chief economist, Mark Zandi, who joins other economic experts in predicting that the bipartisan infrastructure framework and a reconciliation bill reflecting the rest of the Build Back Better agenda would significantly grow the American economy, adding nearly 2 million jobs each year on average across the decade. Zandi’s analysis of the proposals found that the policies contained within this framework will promote economic opportunity for all Americans, increase labor force participation, and help reduce income inequality across the country. President Biden’s Build Back Better agenda will ensure that as we rebuild our nation’s infrastructure and create good-paying jobs, we are creating an economy that gives all of our people the tools they need to Make it in America.

Check out the highlights of Zandi’s analysis in today’s Washington Post’s Power Up newsletter.

A few key quotes:
  • Greater investments in public infrastructure and social programs will lift productivity and labor force growth, and the attention on climate change will help forestall its increasingly corrosive economic effects,” Zandi concludes. “Moreover, the policies being considered would direct the benefits of the stronger growth to lower-income Americans and address the long running skewing of the income and wealth distribution. Passage of legislation is far from certain but failing to pass legislation would certainly diminish the economy’s prospects.”
  • “With unemployment still near 6% and labor force participation well below where it was pre-pandemic, the economy still has considerable slack, equal to approximately 10 percentage points of GDP. But the bipartisan infrastructure deal and reconciliation package will deliver less than a percentage point of GDP growth in 2022 and closer to 2 percentage points of GDP growth each year from 2023 to 2025. Given the fiscal support still in train, mostly from the [American Rescue Plan], this would be just enough to provide the added GDP needed to get the economy back to full employment. Moreover, much of the additional fiscal support being considered is designed to lift the economy’s longer-term growth potential and ease inflation pressures.”
  • “The legislation is more-or-less paid for on a dynamic basis through higher taxes on multinational corporations and the well-to-do and a range of other pay-fors. Worries that the plan will ignite undesirably high inflation and an overheating economy are overdone.”
  • “The reconciliation package also helps address the wide and growing disparity in the nation’s income and wealth distribution.”