Goldman Sachs' Economics weekend note on US spending
In brief (... some hair-raising projections from GS):
- The US fiscal outlook is not good
- We project the federal deficit will increase from $825bn (4.1% of GDP) to $1,250bn (5.5% of GDP) by 2021. By 2028, we expect it to rise to $2.05 trillion (7.0% of GDP) in our baseline scenario
- we believe the risks are tilted in the direction of larger deficits than projected
- A recession would widen the deficit and boost the debt/GDP ratio
- An expanding deficit and debt level is likely to put upward pressure on interest rates, expanding the deficit further
- a chronic deficit in the range of 6-7% of GDP in the next decade would imply a cumulative boost of around 70bp over time
I guess a bigger deficit and rising rates are USD supportive, until they aren't
ifyouknowwhatImean?