Posted on 04/27/2020 2:52:35 PM PDT by fluorescence
The U.S. economy is expected to shrink at an annual rate of almost 40% in the second quarter, and the budget deficit will explode, the nonpartisan Congressional Budget Office said Friday.
[snip]
The CBO chief said the budget deficit would hit a nominal record of $3.7 trillion, well above the $1.413 trillion seen in 2009.
The impact of the sharp drop in output on the government’s bottom line would be sharp. In addition to the $3.7 trillion 2020 deficit, the CBO said government debt held by investors and other members of the public would reach 101% of the size of the U.S. economy by the end of the fiscal year in September. At the end of the 2019 budget year, it totaled 79.2%.
The glut of debt was not expected to have much impact on demand for U.S. paper, though. Interest rates on the Treasury 10-year note were projected to average 0.8% for 2020 and fall to 0.7% in 2021.
In its projections for gross domestic product, the CBO said the size of the economy would shrink by 11.8% in the second quarter compared with the first quarter, a pace that, if maintained, would result in a 39.6% drop on an annualized basis. For the third quarter, the CBO sees growth returning, with GDP rebounding at a 23.5% annual rate.
On the jobs front, unemployment is projected to hit 14% in the second quarter, peak at 16% in the third quarter before dropping back to 11.7% in the last three months of the year. “The increase in that rate in the second and third quarters reflects the net effect of a projected loss of nearly 27 million in the number of people employed and the exit of roughly 8 million people from the labor force,” Swagel wrote.
(Excerpt) Read more at marketwatch.com ...
Let our people go!!!
Looks like we’re testing the MMT theories.
We are Toast, the damage is already done, it is going to go downhill from here and most people are unaware of what lies ahead, it aint pretty!
Meh, its better than the economy imploding!
Errrr, wait. /s
Looks like we’re testing the MMT theories.
________________________________________________
We’ve been testing them for quite some time. Many Republicans and Conservatives have been content with the government declaration that the Federal Reserve System still has a private banking dimension.
But the reality is that banks are a protected sector of the economy. Jefferson and Jackson sensed the danger long-ago. If this sector of the economy is invaluable to a growing state/government and you allow it to remain in private hands, you will create a very small group of ultra-rich individuals with ultra-powerful influence on the nation. In effect one creates a piece of the oligarchy that thwarts the will of the people and makes meaningful democracy impossible.
Let me qualify my comments a bit more. Allowing it to remain privatized while ultimately being “too big to fail” is what creates the oligarchy. Jefferson and Jackson supported a more radical “free banking” philosophy. Their notions of the limitations on the banking sector were consistent with a largely agrarian and isolationist country. Of course, we’re a long way from that today.
This is criminal government, folks. Criminal.
JoMa
Our National Debt currently sits at 108% of GDP.
119% of GDP was the highest, right after WWII ended.
I’m to the point where I’ve stopped worrying about it and just keep my own house in order. Not much else I can do, really.
*SHRUG*
https://www.thebalance.com/national-debt-by-year-compared-to-gdp-and-major-events-3306287
This is not going to do much stimulating. It’s not just a problem with demand. It’s a problem also with supply.
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