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Durable goods, Air freight, Macro economic comment

Summary:
The decline continues, and this was well before the coronavirus: Rolling over: The charts show the economy has been continuously decelerating from the time the tariffs took effect, and now with the coronavirus it’s likely to decelerate that much more quickly into negative growth. The private sector tends to be pro cyclical, which is why back in 2009 it took a federal deficit of maybe 10% of GDP to turn things around, and why it is likely it will take same to turn things around if they continue to decelerate, which means an annual federal deficit approaching .5 trillion. The only question is how the federal deficit will get that high- the ‘nice’ way via proactive fiscal adjustment, or the ‘ugly’ way via falling tax revenues and rising transfer paymentsduring the

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The decline continues, and this was well before the coronavirus:

Durable goods, Air freight, Macro economic comment
Rolling over:

Durable goods, Air freight, Macro economic comment

The charts show the economy has been continuously decelerating from the time the tariffs took effect, and now with the coronavirus it’s likely to decelerate that much more quickly into negative growth.

The private sector tends to be pro cyclical, which is why back in 2009 it took a federal deficit of maybe 10% of GDP to turn things around, and why it is likely it will take same to turn things around if they continue to decelerate, which means an annual federal deficit approaching $2.5 trillion.

The only question is how the federal deficit will get that high- the ‘nice’ way via proactive fiscal adjustment, or the ‘ugly’ way via falling tax revenues and rising transfer payments
during the recession.

My guess is that once again it happens largely the ‘ugly’ way, unfortunately.

WARREN MOSLER
Warren Mosler is an American economist and theorist, and one of the leading voices in the field of Modern Monetary Theory (MMT). Presently, Warren resides on St. Croix, in the US Virgin Islands, where he owns and operates Valance Co., Inc.

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