Government debt is growing much faster than the economy, which can only lead to disaster. From MN Gordon at economicprism.com:
The first quarter of 2019 is over and done. But before we say good riddance. Some reflection is in order. To this we offer two discrete metrics. Gross domestic product and government debt.
GDP for the quarter, as estimated by the March 29 update to the New York Fed’s GDP Nowcast, grew at an annualized rate of 1.3 percent. For perspective, annualized GDP growth of 1.3 percent is akin to getting a 1.3 percent annual raise. Ask any working stiff, and they’ll tell you…a 1.3 percent raise is effectively nothing.
By comparison, the U.S. budget deficit for fiscal year 2019 is estimated to hit roughly $1.1 trillion. This amounts to an approximate 5 percent increase of the current $22.2 trillionnational debt. In other words, government debt is increasing about 3.85 times faster than nominal GDP, which is about $21 trillion.
These two metrics offer a rough perspective on the state of the economy. Deficit spending is grossly outpacing economic growth. Heavy treatments of fiscal stimulus are being applied. Yet the economy’s practically running in place. In short, the state of the economy is not well.
And as the economy slows and then slips into reverse later this year, and as Washington then applies more fiscal stimulus, these two metrics will move even further towards madness. What’s more, the Fed is gearing up to promote this greater state of madness in any and every way possible…