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Trump says that the US will grow its way out of the $22 trillion debt

“Instead, annual deficits and the federal debt have grown on his watch. [Opinion: As the national debt hits $22 trillion, these are the only people trying to cut spending]” reports washingtonexaminer.com. Trump claimed on the campaign trail that he would eliminate the federal debt.Debt will be as large, relative to the U.S. economy as it has ever been by 2029, according to the CBO, assuming the individual tax cuts Trump signed into law expire as expected in 2025.The CBO expects modest growth in the coming years.In an analysis released late…

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Democrats seek to cut U.S. budget deficits in half: Yarmuth

“Annual federal budget deficits are hurtling toward $1 trillion and Yarmuth said it is “not going to be easy to cut them by half a trillion dollars” by around 2029, especially given looming economic cross-currents” writes Midwest Communications Inc for 95kqds.com. WASHINGTON (Reuters) – The chairman of the U.S. House of Representatives Budget Committee on Tuesday said he and other senior Democrats aim to write a fiscal blueprint this year that would cut annual budget deficits by 50 percent in the next 10 years, possibly including tax hikes on corporations…

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China may be ready to buy more US goods — but economists say that isn’t what matters

“Pushan Dutt, an economics professor at business school INSEAD, put it this way: “If I pay my Pilates instructor every month for Pilates classes, then I run a ‘bilateral trade’ deficit” writes -stefan Legge for cnbc.com. Amid an ongoing trade war between the world’s two largest economies, reports emerged that China has offered to buy more U.S. products in the coming years to reduce the two countries’ bilateral goods trade imbalance.That is, a bilateral trade balance — which measures the transactions between two countries — is an indicator that doesn’t…

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Central banks are not — and never should be — the fixers of last resort

“America’s economic and financial disaster scenarios are increasingly popular trades in spite of an economy growing at twice the rate of its noninflationary potential, with a 3.9 percent unemployment at one of its lowest readings and nearly a million confident job-hoppers maximizing their earnings and career prospects” writes Michael Nagle for cnbc.com. But the U.S. financial community is unmoved by the country’s calamitous trade imbalance with China, and the fact that Beijing’s talk about opening up and meeting, on its own terms, some of Washington’s demands for regulatory changes will…

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Markets News Stocks 

The traditional stock-bond correlation disappeared in 2018, spelling trouble for investors

“To show the recent regime shift, Slok compares the movements of the 10-year Treasury yield against percentage changes in the broad-market S&P 500 over the last five years, in the chart below” writes Sunny Oh for marketwatch.com. As a result, investors with a balanced portfolio of stocks and bonds were saddled with deeper losses than they had anticipated.Since the 1980s, the U.S.’s rising deficits have not weighed on Treasurys, with the 10-year yield riding a multidecade bond bull market to hit a record low of 1.32% in 2016.What’s more, if…

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Our deficits may finally be coming home to roost…

“After all, just a few years earlier, budget deficits were touted as a cure for high unemployment and a spur to growth” reports thehill.com. These costs can, for example, show up in the form of some combination of inflation, tax increases and spending cuts.Excessive budget deficits might also lead to higher future inflation — itself a sort of tax.Unsustainable budget deficits can be seen as a sign of political dysfunction.Given the political difficulty of cutting popular entitlement programs, future tax increases are more likely than spending cuts. Source: thehill.com

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Facing rising deficits, Treasury will lean on ‘tried and true’ securities, for now

“The weighted average maturity of Treasury debt outstanding has been stable since February and now stands at just below 70 months” writes Senior Economics Reporter for marketwatch.com. But Treasury debt managers won’t be able to relax for long, Stanley said.Facing rising budget deficits and borrowing needs, the Treasury Department is going to rely on reliable debt instruments rather than offer any new exotic securities to raise the needed funds, analysts said. Source: marketwatch.com

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Trump’s unprecedented deficits put us into uncharted territory

“I am not, however, old enough to remember the one time the federal debt was entirely paid off” writes Special To The for seattletimes.com. And, like with the federal budget, the ruling Republicans not only want to do nothing — they want to make it worse.But the enduring deficits caused under Trump push us into uncharted territory.President Barack Obama used heavy deficit spending to fill the hole in demand caused by the Great Recession.Deficits entered the modern era under the Reagan presidency, largely because of tax cuts combined with big…

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No, Trump’s Tax Cut Isn’t Paying for Itself

“That means three months of the 2018 fiscal year included a period without the tax cuts in place” reports nytimes.com. Which is to say, they’re down by $10 billion, in a direct comparison after the tax cuts started.When the tax law passed, members of Congress had all sorts of evidence suggesting it would accelerate America’s growing budget deficits.The tax cuts mostly took effect in January 2018.Personal tax receipts are up on their own, but corporate tax receipts are down by about a third from a year ago. Source: nytimes.com

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