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1.6 Trillion Reasons To Bet On America’s Future

1.6 Trillion Reasons to Bet on America’s Future

1.6 Trillion Reasons to Bet on America’s Future

In the summer of 1919, the U.S. military tasked a 28-year-old Army colonel to send the first convoy across the United States. Composed of trucks and tanks, the transcontinental convoy struggled on local roads, some of which consisted of little more than mud. Light and heavy motor trucks, touring cars, special “observation” cars, motorcycles, ambulances, and tractor trailers made up the convoy. It encountered numerous difficulties. It took 62 days to cover 3,251 miles from Washington, D.C., to San Francisco. That works out to a pace of around 52 miles per day. 1919 Transcontinental Convoy (Courtesy of The National Archives) But the colonel completed his assignment. And over the years, he’d conquer many more – including the liberation of Europe in the mid-1940s. The leader of that 1919 convoy: Dwight D. Eisenhower. Thirty-seven years later, President Eisenhower signed the 1956 Federal Highway Act. The Act resulted in the construction of a massive, multilane highway system crisscrossing the country. The government designed the interstate system to avoid the issues Eisenhower faced during his 1919 convoy. The federal government doled out 90% of the costs, or about $24.8 billion. In today’s dollars, that’s $272.8 billion. Local cities and counties were responsible for the remaining 10%. The work took 36 years to finish. The government didn’t declare the U.S. highway system complete until 1992. According to the National Bureau of Economic Research, without the highway system, real gross domestic product (GDP) today would drop by $619.1 billion – or about 2.6%. That may not sound like a lot… But a 2.6% drop in GDP would throw the country into a recession. So, it’s no surprise that all this infrastructure spending led to an economic boom, which would later manifest in the stock market. Investors largely avoided stocks going into the 1950s. But after the signing of the Federal Highway Act, the country entered a 10-year secular bull market. Between 1956 and 1966, the Dow doubled and topped 1,000 for the first time. Now, I’m not saying the Federal Highway Act was solely responsible for the 1950s bull market. But the hundreds of billions of dollars it pumped into the U.S. economy unequivocally contributed to the economic boom. According to the American Road & Transportation Builders Association, the interstate highway system played a major role in the nation’s 533% GDP growth over the past six decades – from $3 trillion in 1956 to $19 trillion in 2020. In 2020, the interstate system carried nearly 75% of U.S. truck freight. And millions of vacationers and tourists travel along our interstate highways every year. Despite the COVID-19 pandemic, the tourism industry contributed $1.1 trillion to U.S. GDP in 2020. As you can see, the interstate highway system is the backbone of the U.S. economy. Just as the Federal Highway Act unleashed an economic boom in the United States, today’s government spending will similarly lead to another American renaissance. Made in America Again The trend I’m talking about is the reshoring of U.S. manufacturing. Reshoring is the process of returning production and manufacturing back to the company’s home country. As U.S. reshoring grows, we’ll see hundreds of thousands of jobs come back to American shores. We call this trend “Made in America Again.” And it will lead to a renaissance in U.S. manufacturing. Last month, we told you this trend will unleash an estimated $1.6 trillion in the U.S. economy . That’s based on four federal laws enacted over the past two years. They are: The Investments and Infrastructure Act. This allocates $1.2 trillion to build U.S. infrastructure for a new generation of industrial facilities over the next several years. CHIPS and Science Act. This $52.7 billion bill is hyper-focused on ensuring America reclaims its lead in semiconductor chip design. Inflation Reduction Act. This bill provides $250 billion for clean energy technologies and new, state-of-the-art factories for building them. COMPETES/United States Innovation and Competition Act. This is a $51.5 billion grab bag of government spending, with funds going toward increasing U.S. production and reducing supply chain vulnerabilities. The above spending is contingent on private-sector companies completing specific projects through approved government contracts. Much like the highway system, that initial investment today could lead to massive returns for the private sector. According to the Reshoring Initiative, nearly 300,000 jobs were reshored in 2022. And companies have reshored more than 1.2 million jobs since hitting a low in 2010… with most of those gains coming in the last three years. For instance, chipmaker Micron Technology has already broken […]

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Daisie Hobson

Daisie Hobson is a Director at the Reshoring Institute and an engineer with many years of experience in manufacturing and project management.

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