Monday, May 21, 2018

Goldman Sachs: The fiscal outlook for the US 'is not good'

The fiscal outlook for the United States "is not good," according to Goldman Sachs, and could pose a threat to the country's economic security during the next recession.

According to forecasts from bank's chief economist, the federal deficit will increase from $825 billion (or 4.1 percent of gross domestic product) to $1,250 (5.5 percent of GDP) by 2021. And by 2028, the bank expects the number to balloon to $2.05 trillion (7 percent of GDP).

"An expanding deficit and debt level is likely to put upward pressure on interest rates, expanding the deficit further," Jan Hatzius – Goldman's top economist – wrote Sunday. "While we do not believe that the U.S. faces a risk to its ability to borrow or repay, the rising debt level could nevertheless have three consequences long before debt sustainability becomes a major obstacle."

Legislators passed a package of corporate and individual tax cuts in December, a two-year budget deal in February and a massive spending bill in March that boosted government spending on both domestic and military programs.

In light of the big spending and easier tax burden, the Congressional Budget Office – Capitol Hill's nonpartisan financial scorekeeper – in April projected that debt could equal GDP within a decade if Congress extends the tax cuts, a level not seen since World War II.

Read the rest here.

1 comment:

  1. The Vampire Squid discovers fiscal/monetary conservatism.

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