9/12/2011
By Brian Sozzi, Research Analyst

Nowadays the word uncertainty is tethered to either a discussion on the final outcome of the EU sovereign debt crisis or the outlook for the broader pool of risk asset markets.  The brains of investors have become trained to associate uncertainty with something bad instead of an opening to exploit for personal gain.  It's time for uncertainty to gain another meaning, a very specific one that is hitched to the back of our domestic economy.  While the President's latest infrastructure initiative will create jobs at some point in 2012 if it's passed by Congress, in the immediate future there is uncertainty attached to actual jobs being done as we speak.

In all, some 53 laws amounting to $767 billion in spending are up for re-authorization by September 30, a mere 14 business days away.  The Post Office and FAA funding issues are receiving the most attention, but the Surface Transportation Bill demands careful watching in the coming weeks.  Chances are if a person is at the job site assisting in the paving of a road there is a basic awareness that the gig may abruptly end by September 30, creating uncertainty, and ultimately triggering a negative economic feedback loop.  Multiple that thought process by said worker by two million, or the alleged number of jobs on the line if an extension is not passed, and the economic impact both currently and as the calendar turns to October becomes fairly obvious. 

When we hear, and see via confidence reports, that Congress's year of divineness is circling back onto Main Street this wait to the last minute approach to funding for programs is a prime example.  In an economy struggling to swim away from the great white shark known as the 2008 financial crisis, little things if left unresolved by elected leaders add up in a negative manner.

Surface Transportation Bill at a Glance

Facts

* Funding extended (stop gap measure in other words) eight times since September 2009.
* Bill is funded by 18.4 cent a gallon fuel tax.
* Requires $51.5 billion in funding.
* House has proposed linking funding to projections of future fuel tax revenue.

Fuzzy Facts (if bill is not extended)

* Furlough of 8,000 federal highway workers.
* Loss of $85 million a day in tax revenue, according to Bloomberg estimates.
* 134,000 road and bridge projects and 5,000 transit projects grind to a halt.
* 2 million jobs on the line.

Brian Sozzi
Wall Street Strategies

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