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Biden proposes $5 trillion in new federal spending: How the headlines can affect your money

Plus, markets rise and inflation is higher than expected.

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US President Joe Biden speaks on the economy at Cuyahoga Community College Manufacturing Technology Center, on May 27, 2021, in Cleveland, Ohio.
Nicholas Kamm | AFP | Getty Images

Markets rise and inflation comes in higher than expected. Plus, President Joe Biden proposes a new spending bill. Here's how the news could affect your money.

Markets climb

The Dow and S&P 500 climbed Thursday after stronger-than-expected jobs data. The Dow rose 0.4%, and the S&P 500 added 0.1%. The Nasdaq was flat. 

Markets continued to climb Friday morning. 

Inflation higher than expected

A key inflation indicator rose more than expected in April from a year earlier, the Commerce Department reported Friday. The core personal consumption expenditures index, or core PCE, increased 3.1% year over year and rose 0.7% over the past month. Both jumps are bigger than economists expected. 

The PCE price index reflects the change in price of goods and services purchased by consumers. The fact that it went up means that you can expect to pay more for things like groceries and car repairs.

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White House proposes $5 trillion in new spending

Biden proposed $5 trillion in federal spending over the next 10 years on Friday as part of his fiscal year 2022 budget request. This will bring the total budget request for next year to $6 trillion. The spending is meant to boost economic recovery by supporting the American Jobs Plan and American Families Plan. Those proposals entail investments in traditional infrastructure and green technology, as well as free universal pre-K and community college.

Most of the money will go towards Medicare, Medicaid, and Social Security. 

The Biden administration has proposed paying for those programs through higher taxes on corporations and wealthy taxpayers.

Words you've heard: inflation

The inflation rate is a measure of the change in prices, which typically increase. When it comes to your personal finances, inflation can affect everything from how much you pay to how much you earn. It can cut into the value of your savings and give you more incentive to keep investing for long-term goals.

Although the daily news can have an impact on your wallet, remember to take a long-term outlook when it comes to decisions on spending, saving, and investing.

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