the prospect of increased u.s. government spending is tantalizing investors who see such outlays as critical to revitalizing economic growth and ending the era of ultralow interest rates, while frustrating others who fear efforts won<u+2019>t go far enough. after years in which central-bank stimulus measures have produced only sluggish growth, many economists say now is the time for the u.s. to embark on long-debated plans to build roads, bridges and sewers. building infrastructure, they say, could boost employment, wages and productivity, the last of which has fallen disturbingly low in recent years, and create economic wealth far outweighing the costs of additional federal borrowing. lifting hopes for such plans, democratic presidential candidates hillary clinton and her republican rival donald trump have proposed increasing infrastructure spending. some investors appear to be wagering that such expenditures will happen. share prices at firms that have the highest revenue derived from government spending have risen twice as much this year relative to their expected earnings as the rest of the s&p 500, according to analysts at bank of america merrill lynch. the spdr s&p global infrastructure exchange-traded fund has returned roughly 14% in 2016, including price gains and dividend payments, vs. the s&p 500<u+2019>s 6.6% return, according to factset. first trust ise global engineering and construction index fund has returned around 10%. <u+201c>fiscal spending is an answer to an economy that is not growing at the level it should be this many years after the recession,<u+201d> said andrew slimmon, portfolio manager with morgan stanley investment management. with growth also weak in europe and japan, politicians and investors world-wide are increasingly discussing the potential of fiscal, versus monetary, policy to spur economies. in the u.s., hopes for fiscal spending have been lifted by a series of deals in 2015 suggesting that austerity on capitol hill had ended. congress agreed to modestly lift caps on discretionary spending and make permanent a series of tax breaks that added to the deficit. <u+201c>congress has demonstrated a tendency to start adding a little bit to the deficit, whereas several years ago the tendency when you hit a big political deadline, you would use that to reduce the deficit,<u+201d> said alec phillips, a political economist at goldman sachs group inc. still, most fiscal-policy analysts say major new stimulus is likely only if one party controls congress and the white house. for now, many forecasters still see divided government as the most likely outcome, with mrs. clinton winning the presidency while the gop, with a smaller and more conservative majority, holding on to at least the house of representatives. mr. trump has proposed big increases in spending on infrastructure, defense and veterans<u+2019> health care, together with a large tax cut that could send deficits surging. his advisers say the tax cuts, plus other steps on trade and regulation, could boost growth to pay for those initiatives. many economists are skeptical of those statements and say the plan is likely to send federal borrowing much higher. the $275 billion, five-year plan put forward by mrs. clinton, who is leading in the polls, isn<u+2019>t large enough to represent a boost in public investment sufficiently robust to break the economy out of a low-rate, low-growth funk, some economists say. <u+201c>this is not like <u+2018>let<u+2019>s go to the moon,<u+2019> or build new national highways,<u+201d> said former democratic budget aide stan collender, now executive vice president of qorvis mslgroup, a public-affairs firm. mrs. clinton has promised her infrastructure-spending package will pass in her first 100 days. she has proposed paying for it by implementing a corporate-tax-code overhaul and raising money from earnings of multinational companies held overseas. but many analysts doubt her plans will sail through what many expect to remain a republican-controlled congress. <u+201c>fiscal gridlock could well dominate the landscape for another four years and frustrate efforts to provide any meaningful stimulus,<u+201d> said david rosenberg, chief economist and strategist at toronto-based money manager gluskin sheff & associates inc. some economists and investors also say fiscal stimulus needs global coordination to significantly boost demand world-wide, and even with increased talk, such alignment is nowhere close. <u+201c>investors hoping for this global pivot are likely to be disappointed,<u+201d> said megan greene, chief economist at manulife asset management. <u+201c>i do think we<u+2019>ll get fiscal stimulus in the u.s. and it<u+2019>ll help on the margins, but i don<u+2019>t think it<u+2019>ll be a game changer.<u+201d> still, some maintain even a tilt toward more spending would help markets. <u+201c>from a stock-market perspective, you don<u+2019>t need nearly as much as you think to elicit a very powerful market response,<u+201d> said jonathan golub, chief u.s. market strategist at rbc capital markets. write to aaron kuriloff at aaron.kuriloff@wsj.com , corrie driebusch at corrie.driebusch@wsj.com and nick timiraos at nick.timiraos@wsj.com
election raises hopes for infrastructure outlays<u+2014>whoever wins  - wsj
aaron kuriloff corrie driebusch nick timiraos