As investors, we must acknowledge the inherent unpredictability of the future: macroeconomic factors, geopolitics and market volatility limit our ability to produce reliable forecasts. For the United States, this uncertainty today is compounded by the presidential election in November.
Infrastructure as an asset class is generally resilient to the volatility of the economic cycle, which is one of the key reasons why investors allocate to it. Nevertheless, upcoming political events may determine the future trajectory of U.S. fiscal policy, which will likely have consequences for economic growth and inflation, influencing return expectations, and the positioning of infrastructure portfolios.
Why fiscal deficit matters
When we look at the recent resilience of the U.S. economy, one data point stands out: a fiscal deficit above 6 percent. This has supported U.S. growth despite inflation, high interest rates and an inverted yield curve signaling the r