4 Stocks To Gain From Trump's Infrastructure Push

Immediately after winning a closely fought election on Nov 9, Donald Trump outlined his priorities as President. Promising to step up economic growth he promised to build the U.S. into the “strongest economy” in the world. Trump shied away from several of his more divisive campaign promises and instead chose to mention one unifying issue alone.

Trump pledged to “rebuild our highways, bridges, tunnels, airports, schools, hospitals.” The emphasis on building up infrastructure “second to none” puts the spotlight squarely on stocks related to the sector. This may be a good time to add some of the better options from this area to your portfolios.  

Glaring Deficit Lingers

The state of U.S. infrastructure has been a matter of concern for some time now. According to a study published by the American Society of Civil Engineers in May, GDP could decline by nearly $4 trillion during 2016-25 if the glaring infrastructure gap is not addressed immediately. The poor condition of bridges, roads, waterways and airports would result in that amount of losses in lower sales, higher costs and lower incomes.

According to the report, the economy could also suffer job losses of up to 2.5 million if infrastructure spending is not stepped up. In 2015, domestic public capital investment, inclusive of infrastructure, was merely 3.4% of GDP, per figures released by the President’s Council of Economic Advisors. At $611 billion, this amounts to only 0.5% of GDP after accounting for depreciation. 

Massive Impetus to Infrastructure

Both Democratic nominee Hilary Clinton and President elect Trump had been demanding a hike in infrastructure investment while on the campaign trail. Trump’s infrastructure proposals quote National Association of Manufacturers data which estimate that a “ten year funding gap” of nearly $1 trillion exists.

The President elect plans to spend this amount on improving infrastructure. According to the Trump plan, such spending would be financed by private investors. These investments would be made in lieu of tax credits, which would make up around 82% of the total amount of equity invested. Lost revenue would be recovered through a higher quantum of income taxes paid by construction workers and business taxes levied on contractors.

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