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Closing in on the next round of fiscal spending

Wells Fargo Investment Institute - August 5, 2021

by Gary Schlossberg, Global Strategist

Key takeaways

  • Congress appears to be on track to pass two spending bills early in the fourth quarter totaling a record $4 trillion over the next 10 years and keyed to infrastructure and social spending.
  • We believe the economic impact of this latest round of spending plans will be more limited than support earlier this year because of offsettingtax increases and the more extended timeline.

What it may mean for investors

  • The more noticeable effect on portfolio strategy reinforces our favorable view of Industrials and, on balance, our neutral rating for theHealth Care sector.

The Senate took an important step toward twin legislation on infrastructure and social spending with bipartisan agreement on a $1.2 trillion infrastructure package on July 28 that includes roughly $550 billion in new spending. Uncertainties aside, Congress appears to be on track to negotiate and approve this and a social spending measure early in the fourth quarter.

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