Durable goods, Air freight, Macro economic comment
February 27, 2020
The decline continues, and this was well before the coronavirus:
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.