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IRS Reporting Update, New Infrastructure Plan, Metaverse, and More
Each week it is our goal to provide you with understandable and actionable content so that you can make sense of everything going on in the financial world. We also want to try to give you applications for how you can be a better money manager. Today we are going to cover several topics including an update on IRS Reporting Package, an update on the Infrastructure Bill that was just passed by the House of Representatives, the concept of onshoring when it comes to the job market, and closing with why Facebook changed their name and what the meta-universe, or metaverse means.
In our last podcast, we gave you a little information about the IRS reporting package that was originally part of the reconciliation bill. In that package, banks were going to be required to report to the IRS deposits to any bank account over $10,000. Several listeners made strong comments, all of which were strongly opposed to this part of the reconciliation plan. Well, those listeners were not the only ones upset. Trade associations, chambers of commerce and individuals all over the country made their voices and their opposition heard to Republicans and Democrats alike in Congress, sending the same message. As a result, this provision was removed from the latest draft. You can breathe a sigh of relief, as this is good news for those who had serious concerns.
Moving on the Infrastructure Bill that was recently passed, some of you may have seen that the $1 billion infrastructure bill was passed on Friday of last week. Remember that this bill is separate from the $2 trillion Build America Better bill. This infrastructure bill passed on Friday with 6 votes against it from progressive democrats and 13 voted for it from Republicans in the House. In addition to that, the Senate had already passed this bill and there were several republicans who supported it then, so it is being labeled by some as a “bi-partisan” bill and is not waiting for the President’s signature. According to the Wall-Street Journal, here’s a breakdown of about half of the spending in the bill highlighting the largest categories. The first and the largest is $110 billion set aside for roads and bridges which most agree is much needed. $73 billion will be used to update and expand the power grid. $66 billion is set to be spent on rail maintenance, modernization and expansion, most of which will go to Amtrak, with an additional $39 billion used to make public transit more accessible for the disabled and elderly, a lot of which will go to metro city subway systems. $65 billion will be used to expand broadband access. I’d be interested to talk with local mayors in towns across West TN to see how that might impact more rural areas of the state. $55 billion will be invested toward clean drinking water infrastructure. $42 billion will be spent on ports and airports to expand their facilities. What can we expect this to cost in the long run? The Congressional Budget Office expects that it will widen the federal budget deficit by $256 billion over the next 10 years. While some of these funds are being repurposed from other areas, particularly $200 billion of Covid funds that have not been spent, there is still a gap and a strong likelihood that this will add to the deficit. The House has yet to vote on the Build America Better bill, but this is expected in the next few weeks.
Let’s talk about jobs, which are on a lot of people’s minds, and introduce the concept of “onshoring”. You’ve heard about offshoring, which is a term we have used about for decades where jobs are sent overseas. Well, onshoring is a word that you are likely to hear more in the future as we start to bring jobs back into the U.S. With the pandemic shock to the supply chain, more and more companies are looking for ways to source their products domestically. Take Ford’s recent announcement of the plants it intends to build – most notably the one in West TN. Not only will this campus make electric F-150 trucks, but it will also make the batteries that power them. Many other manufacturers will follow suit finding ways to have their suppliers close on this continent where transportation is easier than overseas. Not all, but more essential parts are going to be made in the U.S in the future. This is good for the jobs front.
Speaking of Jobs – the jobs report for October was tremendous. With the nationwide federal unemployment benefit ceasing at the beginning of September, over 500,000 people were added to payrolls in October. That is a strong gain historically. The unemployment rate trickled down to 4.6%. While more people are generally participating in the job market, two demographics are not yet – those over the age of 55 and younger mothers that are having to stay home with kids because of a lack of childcare options. That being said, if we don’t have another wave of covid, these workers should begin coming back into the workforce, slowly but surely. In the meantime, there are a ton of jobs available in nearly every industry and it is even likely that there will be more in the future. This is a trend to keep an eye on and one that we hope will lead to a healing job market in the future.
Did you hear that Facebook changed their name? Ever heard of the metaverse? Well you will hear that term in the future if you have not already. The metaverse, or meta-universe, is the emerging virtual realm – a digital realm or alternative reality. It is an interactive digital world, often entered through the use of virtual reality goggles. Much like the concept of the cloud a decade ago, or the web three decades ago, the metaverse is in the process of being built and will morph depending on the needs of the consumer and the resources of the businesses that use it. Some of this will be incredibly practical. Microsoft is betting big on enhancing its Microsoft Teams platform to allow you to feel like you are in the room with the people you are meeting with virtually, maybe through an Oculus Virtual Reality headset. Think Zoom in an interactive way where you can look around the room and see who you are meeting with almost as if you are actually there. This headset allows you to be immersed into the environment, feeling like you are engaging it in 3D. Facebook is another company betting big that you will also buy goods in the meta universe. Imagine being able to buy at a car with a virtual reality headset, walking around the car, looking at it as though you were really there in the dealer’s lot. Mark Zuckerberg imagines a virtual-reality universe where you could buy almost anything. That’s one of the reasons the company has changed its name from Facebook to Meta. So virtual-reality and augmented reality isn’t just limited to kids playing video games. You are likely to see Oculus lenses and one of the most popular Christmas gifts this season. It’s early. It will take time to develop – maybe even decades. But it could be that “metaverse” eventually becomes as common a term as “internet.”
At MBC/Foundation Bank we are here to serve any of your financial needs. If you need to buy a house, we can show you how to do it wisely or finance it locally. It you want to manage your money better, we can offer you an interest bearing checking account which is one of the finest in the market. If you want to save more for the future, we can show you a plan to invest consistently. We invite you, whatever your financial need, to start your financial conversation with us by exploring our website or contacting your local branch. If you’ve found this podcast helpful, please remember to subscribe in your favorite podcast app and share with your friends. Until next time… God Bless.
– President Chad P. Wilson, CFP
Today’s episode of “Money Matters” was written and recorded by President Chad P. Wilson of McKenzie Banking Company / Foundation Bank on November 9, 2021. This episode does not constitute financial advice. Please consult a financial professional to discuss your specific needs. MBC/Foundation Bank is an Equal Housing Lender, Member FDIC.