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Good morning, and welcome to our rolling reports on the world economy, financial markets, the Eurozone and business.
Global stock markets are moving slightly higher as investors support President Joe Biden’s proposal of a $6 trillion spending plan when he announces his first budget later today.
According to the New York Times, Biden expects to raise a record US$6 trillion in federal spending for the 2022 fiscal year beginning in October, which will increase to US$8.2 trillion by 2031.
The New York Times quoted documents it obtained saying that the Democratic president plans to pay for his agenda by increasing taxes on companies and high-income earners, and that the budget deficit is expected to decrease in the 2030s.
The budget will show how Biden intends to achieve its broad domestic agenda.include U.S. Employment Program Build new transportation, water, energy, and broadband infrastructure, modernize homes, promote manufacturing, and American Family Plan Increase investment in childcare and education.
The budget will also outline how the White House views inflation, employment and economic growth. It is estimated that the budget deficit in 2022 will reach 1.8 trillion US dollars.
But these documents will also be desirable. Biden’s Democrats have only a small majority in the House and Senate, while Republicans are pushing for smaller infrastructure plans. Therefore, a fierce battle is at hand.
As Reuters explained:
Republicans criticized the president for seeking trillions of dollars in new spending, laying the groundwork for a fierce battle over his priorities.
“It seems that trillions of dollars are still emerging,” U.S. Republican Senator Shelley Moore Capito (Shelley Moore Capito) is leading a group of colleagues to counter-offer Biden’s current $1.7 trillion infrastructure proposal.
Yesterday, President Biden stated at an event in Cleveland that now is a good time to invest in economic recovery:
“It’s time to build (on) the foundation we laid for bold investments in families, communities, and nations.
We know from history that this type of investment raises the bottom line and ceiling of the economy for everyone. ”
Biden welcomed the recent progress against Covid-19 and added:
“We have reversed the trend of a once-in-a-century epidemic.
“Now we are facing a question: what kind of economy are we going to build tomorrow? What will we do? I believe this is the moment for us to rebuild the economy from the bottom up and at home and abroad.”
Asia-Pacific stocks boosted overnight, Japanese stocks Nikkei Rose 2.1% and South Korea Cospi Rose 0.8%.
Investors expect that this surge in U.S. spending will affect the global economy because Jeffrey Halle, Senior Market Analyst Wanda, Explanation:
President Biden’s preliminary budget predicts that after tax increases, there will be a deficit of $1.8 trillion next year.
Of course, what the president wants and what he gets from Congress may be very different, but at this level of spending, Asia seems to feel that some good things will fail, and today the Asian stock market has risen.
Yesterday’s strong economic data also supported the stock market. Yesterday, the number of new jobless claims in the United States fell to a pandemic low. The economic growth of the United States in the last quarter was confirmed to be 1.6% (while the United Kingdom and the Eurozone contracted).
Ipek Ozkadesskaya, Senior Analyst Swissquote,Say:
The strong GDP growth in the first quarter, the weekly initial jobless claims hit a new pandemic low, and discussions about the $6 trillion federal spending plan for the next fiscal year boosted most stocks and U.S. dollars. interest.
But will inflation concerns destroy the party again? Later today, we will get the latest “core PCE price” index-the Fed’s preferred inflation indicator, which does not include fluctuating food and energy prices. The annual growth rate is expected to jump from 1.8% to 2.9%.
The University of Michigan’s May Final Consumer Morale Index may highlight that inflation concerns are damaging confidence (As shown in the preliminary report earlier this month).
Agenda
- 10 am British Summer Time: Eurozone Consumer Confidence Report in May
- 1.30pm BST: Personal income data for the United States in April
- 1.30 pm BST: US core PCE price index (the Fed’s preferred inflation indicator)
- BST 3pm: University of Michigan Consumer Confidence Index in May
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