Q1 2018 Was A Fiscal Disaster For America

Econimica ^ | 04/01/2018 | Chris Hamilton

[SeekAndFind]

In the first quarter of 2018, the financial and investing industry went into overdrive detailing the upside of the 2018 tax cuts and the positive impacts of a "business friendly" executive and congressional branch on business in America. The stock market hit record highs and the Federal Reserve proclaimed such good times as to raise their economic outlook and increase the likelihood for interest rate hikes.

From January 1, 2018 through March 28, 2018 (Q1), real GDP likely grew $110 billion (a 2.5% rise on an annualized basis). However, the fly in the ointment...according to the Treasury, from Jan 1, 2018 through March 28, 2018 (Q1), federal debt rose by an astounding $621 billion dollars (a 13.1% increase on an annualized basis). The chart below shows the quarterly change in federal debt versus the quarterly change in real GDP since 2000. Q1 2018 was the second largest quarterly growth in federal debt, only surpassed by the massive free spending of Q4, 2008.

Or, if we just subtract the quarterly growth in federal debt from the growth in real GDP...chart below. Unfortunately, Q1 2018 is one of the worst quarters on record with the growth in federal debt doing laps around the "growth" in Gross Domestic Product (which of course counts all the federal debt fueled activity?!?). Incurring over $621 billion in new debt (to be serviced ad infinitum) to produce just over a $100 billion in new economic activity is something only government could achieve.

However, it gets downright miserable if you add in the massive $500 to $750 billion quarterly growth of unfunded liabilities alongside the growth in federal debt. Together, the UL's and federal debt are rising $3 to $4 trillion annually while GDP is rising around a half trillion.

[bIlluminati]

We have a huge internal market and could do just fine with zero international trade.

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Not true. We could be energy independent soon, if Lockheed-Martin can build the fusion reactor they just received a patent for. But many raw materials are not available. Some are mostly available in China, others Africa. Fusion will change everything, and make Mideast and Russian oil a minor commodity. But about 6 years until early rollout, if Lockheed-Martin can really build this.

[sheana]

Just keep on believing......