JP Morgan on the US deficit and how its supporting the economy. Main points from their note:

  • The FY23 deficit is tracking about US$1.5 trillion, but only thanks to the odd accounting of student debt forgiveness
  • Excluding student debt, the deficit would be closer to $1.8tn, and almost $1tn larger than in FY22
  • This widening should partly reverse as we move into FY24, when we project a deficit around $1.6tn
  • This year's "stealth stimulus" may help explain the economy's resilience to rapid interest rate hikes
Powell hiking lost cartoon

Has the Federal Open Market Committee (FOMC) done enough now?