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London CNN Business  — 

American politicians from both major parties have spent years advocating for an overhaul of the nation’s infrastructure.

Those efforts always ended in failure until Tuesday, when 19 Republican senators voted with Democrats to approve a $1.2 trillion package that includes money to improve roads and bridges across the country.

The House must still approve the measure, but investors are optimistic. The Dow and S&P 500 reached record highs on Tuesday after the Senate vote.

Here’s the thing: Money could begin to flow to shovel-ready upgrades relatively quickly, but it will take years for bigger projects to get underway. The latter category includes projects like broadband, water systems and railways.

That means the immediate economic benefits will be limited.

“There are typically long delays between appropriations and actual outlays when it comes to infrastructure spending; even though the bill specifies appropriation limits for five years, actual outlays may extend well beyond five years,” analysts at Barclays wrote recently.

Barclays said it expects only “modestly stronger” activity in 2022 and 2023 as a result of new infrastructure spending, with the biggest boost to GDP coming in 2024 and 2025. The bank upgraded its 2022 growth forecast by 0.1 percentage points to 4.1%.

The good news is America doesn’t have a near-term growth problem, with the economy still benefitting from massive stimulus and the ongoing return-to-work from the pandemic. In fact, the US economy is at risk of overheating.

Reaction: The US Chamber of Commerce said it has been advocating for investment infrastructure for more than a decade.

“Our elected leaders are on the precipice of a historic investment in our nation’s crumbling infrastructure. Turning this long-overdue promise into a reality will grow our economy and strengthen our competitiveness for decades to come,” the powerful business lobby said in a statement.

So, what will the money be spent on?

  • $110 billion for roads, bridges and major infrastructure projects
  • $39 billion to modernize public transit
  • $66 billion in passenger and freight rail
  • $17 billion in port infrastructure
  • $25 billion on airport upgrades
  • $65 billion to rebuild the electric grid
  • $55 billion to upgrade water infrastructure
  • $21 billion on environmental remediation

The list goes on, and my colleagues at CNN Politics have a full breakdown.

Progress on infrastructure is one of several developments in Washington that investors should be monitoring this summer and fall.

Early Wednesday, Senate Democrats approved a $3.5 trillion budget resolution, setting the stage for the party to attempt to pass a sweeping economic package that would expand the social safety net.

Oh, and this: Republicans in the Senate say they won’t vote to raise the debt ceiling, a mechanism that is a major source of frustration for investors. If Congress doesn’t raise the debt ceiling, the federal government will likely run out of cash by October or November, risking a disastrous default.

The debt ceiling is a legal limit on how much the US government can borrow, and (so far as we know) unique among developed economies. Remember: Congress has already authorized this spending!

Inflation wiped out America’s pay raises

Companies big and small are raising wages to attract workers and hold onto employees as the economy revs back into gear.

But those fatter paychecks aren’t going as far, thanks to rising inflation, reports my CNN colleague Tami Luhby.

In fact, compensation is now lower than it was in December 2019, when adjusted for inflation, according to an analysis by Jason Furman, an economics professor at Harvard University.

The Employment Cost Index — which measures wages and salaries, along with health, retirement and other benefits — fell in the last quarter and is 2% below its pre-pandemic trend, when taking inflation into account.

Not counting inflation, compensation rose 2.8% between March and June, despite the relatively high unemployment rate — a trend that reflects the tight labor market. Job openings are at record-high levels, according to the Bureau of Labor Statistics.

But at the same time, prices are soaring. Gas costs more. Food is more expensive. Car prices are at record levels. The consumer price index rose 0.9% in June and 5.4% over the past 12 months — the largest jumps for each since mid-2008.

How long will the trend continue? Consumer price index data for July, which will be published at 8:30 a.m. ET, could provide clues.

How to pressure companies on climate

Individuals can swap out lightbulbs, slash energy use and reduce plastic consumption. But making real progress on climate requires bold action by the world’s biggest companies, report Rachel Ramirez and Alexis Benveniste.

Joeri Rogelj, one of the authors of this week’s landmark UN report, said the world requires rapid change on a big scale to avoid catastrophic impacts.

“As an individual, there are things we can do in our own lives, but they won’t be sufficient to rise up to the challenge of halting climate change,” Rogelj told CNN Business.

“What is really important is structural change — and that can only be achieved through long-term thinking and long-term investments and regulations,” he added.

As climate anxiety runs high, Rogelj said there are meaningful ways individuals can put pressure on corporations and policymakers to make rapid, stringent cuts on planet-heating emissions.

“If you have savings, you can reach out to your community and put them in more environmentally friendly goals,” Rogelj said. “You can also talk to your decision-makers and let them know that this is an issue that you care about by writing them letters.”

So, you heard the man. Get writing.

Up next

Earnings from Wendy’s, Canada Goose, NIO and Sonos.

Also today:

  • US CPI for July at 8:30 a.m. ET.
  • EIA report on crude oil inventories at 10:30 a.m. ET.

Coming tomorrow: US jobless claims and the producer price index for July.