How to React to Federal Defecit Improvement?

Oct 26, 2022 | Macro Insights, No Bull Economics

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There was some celebrating in the press about an improvement in the Federal deficit which recently rebounded to -$1.375 trillion from a -$3.132 trillion covid lockdown low. A good way to provide context for deficit levels is to consider the dollar amount as a % of GDP. Using this metric, we can see that the covid deficit was not as severe as during WW2, but severe all-the-same with a second-place finish historically. Notably, the WW2 deficit rocketed to a record surplus after the war, but we don’t think that will be remotely possible post-covid. In fact, this chart reveals a disturbing long-term trend of deficit spending for the Federal government which, of course, is unsustainable. This bad habit is not something the government can tax itself out of, given the magnitude and length of the infraction. So, while the recent deficit improvement is most welcome, the long-term trend indicates the urgent need for government spending reform in someway other than implementing a “Great Reset” that would replace the American economic system (best in the world) with some version of socialism, an economic model which has failed spectacularly across all parts of the world. The Federal government is best when it supports small business, free markets & fair trade in our opinion. Let’s get the country back to business!     

Federal Defecit Graph
Federal Defecit Graph

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