In my decade forecast, I projected that in the next recession that the deficit would climb to over $2 trillion. Clearly, that demonstrates I am an optimist. Here’s a chart I shared back in January.
Between reduced tax revenues and increased spending, I now expect this year’s deficit will be at least $4 trillion.
I will bet you a dollar to 40 doughnuts that we will see at least another $1 trillion emergency spending bill to be spent in the third quarter. My logic is as follows.
The following equation is used to calculate the GDP: GDP = C + I + G + (X – M) or GDP = private consumption + gross investment + government investment + government spending + (exports – imports).
This transforms the money-value measure, nominal GDP, into an index for quantity of total output.
I wrote recently about the long-ago political decision to include government spending in the GDP numbers. U.S. GDP is roughly $20 trillion a year (using numbers that are easy to divide). That means $5 trillion per quarter.
America’s federal debt is set to exceed the size of the entire U.S. economy this year for only the second time since the end of World War II, a reflection of the extraordinary emergency measures approved by Congress in response to the coronavirus pandemic, the nonpartisan Congressional Budget Office said Thursday.