Mario Gabelli on infrastructure
Billionaire Mario Gabelli recently said that infrastructure is an important player in the current market scenario. After the US election (SPY) (QQQ), he said that infrastructure could perform well during Trump’s presidency. Read, What Are Mario Gabelli’s Top Infrastructure Plays? to learn more.
He said, “Infrastructure is important because it helps fiscal stimulation. It offsets monetary policy. It helps the jobs in the middle of the country. It helps everyone.” The Trump administration wants to expand fiscal stimulus in the form of higher infrastructure spending and higher defense spending. The economy has seen lower fiscal stimulus in the past years, and government spending and investment have also fallen.
According to data provided by the OECD (Organisation for Economic Co-operation and Development), the annual growth rate of the investment forecast has fallen in the past few years. In 2014, the annual growth rate for the investment forecast was 4.2%. In 2015, it was 3.7%, and in 2016, it fell to 0.60%.
Forecasts indicate that the growth rate could be 2.3% in 2017 and 5.3% in 2018. Investment forecasts seem to be improving gradually. Market participants seem optimistic about future economic growth (IWF) (VOO) (IWM).
Higher investment and higher infrastructure spending will create more jobs, which would also likely lead to improved consumer spending. Consumer spending is one of the major components of the US economy (VFINX).
In the next part of this series, we’ll analyze Mario Gabelli’s views on crude oil.