Infrastructure Part 1- Biden outlined his $2T infrastructure plan this week – it is structured as $250M per year over 8 years funded by an increase in corporate taxes from 21%-28% (still lower than 2017 cuts) and the elimination of a rule that allows U.S. companies to pay no taxes on the first 10% of returns when they locate investments in other countries.
-$621 transportation infrastructure: bridges, roads, public transit, ports, airports, EV development (500K EV Stations!)
-$400B for elderly & disabled care
-$300B drinking water, broadband, & electrical grids
-$580B American manufacturing, R&D, & job training
–$213B for housing: construction of 500K homes in low-mid income areas. 2M affordable homes and commercial buildings to be renovated over 10 years
-Part 2 to be released in a few weeks
Rates – increased very marginally this week as the price of Mortgage Backed Securities declined, continuing a 2 month trendline. Rates are down approximately 1/2% year over year.
Jobs – over 900K jobs were created in the Month of March, which was stronger than expectations – leisure and hospitality are leading the way on job gains as the economy starts to re-open and the population becomes more vaccinated. The headline unemployment figure dropped 0.2% to 6% but this doesn’t include folks working part time due to economic errors or factor a misclassification error. If you add all of this in the actual level is closer to 10.7%
Rents- after dropping over 2% in the previous year, on a year over year basis rents are at the same level they were in March of 2021. Even metro areas like San Fran, NY & Seattle who saw decreases over 20-27% are trending up over the past two months and are now only down 19-23%. Watch for this increase to factor into inflation numbers.
Home Appreciation – Case-Shiller, largely considered the best measure of home appreciation because it tracks values nationwide on individual homes, showed that homes appreciated 11.2% year over year – the highest reading in 15 years.
Mortgage Application volume decreased 2.2% from the previous week. Purchases remain up 39% year over year (remember much of the economy was closed this time last year) and refinances are down 32% over the same time period.