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Goldman: What Is Going On In The US Is "Usually Reserved For Times Of War"

Back in February, when the world was starting to become familiar with the trajectory of US debt and deficit spending under Trump’s fiscal plan, we showed a chart from Goldman which made a troubling forecast: the US fiscal situation was headed for “banana republic” status, or as Goldman put it more politely, “uncharted territory” as a result of soaring federal debt and interest expense. Now, in a follow up report, Goldman economist Alec Phillips identifies the key risks that will worsen the “already-grim” US fiscal outlook (which he defines simply as “not good”). As a reminder, just yesterday we reported that the US fiscal deficit has resumed its surge, rising 40% Y/Y to $898BN for the first 11 months of the year, following the biggest monthly outlay by the US government in history. Goldman – which now projects a $1.05tn deficit (4.9% of GDP) for FY2019 – picks up on this and writes that its expects that figure to rise significantly over time, reaching 5.5% of GDP by 2021 and 7% of GDP by 2028. This, Goldman adds ominously, “puts US fiscal policy in  uncharted territory in two respects.”  First, running such a large primary deficit (federal revenues minus spending,…

Source: Zero Hedge | Goldman: What Is Going On In The US Is "Usually Reserved For Times Of War"

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