iBankCoin
Wake up. Break the cycle. Teach your children.
Joined Oct 24, 2016
1,143 Blog Posts

Goldman Warns: Federal Deficit Spending In “Uncharted Territory”, May Not End Well

The fortune tellers at Goldman Sachs have looked into their crystal balls following the Trump administration’s controversial budget and an ambitious new infrastructure plan, and concluded that things might not end so well for the U.S. economy.

The firm said on Sunday that federal deficit spending has pushed the economy toward “uncharted territory,” and that Trump and Congressional Republicans may not be able to count on the economic boost from their tax reform for much longer.

Goldman Sachs said in a note to clients that the federal deficit would reach 5.2 percent of U.S. growth by 2019, and would “continue climbing gradually from there.” –CNBC

The GOP has been counting on tax reforms delivering heavy economic stimulus – with corporate bonuses lining consumers’ pockets while investing in new areas of growth. Goldman, however, warns of diminishing returns after 2018. “The fiscal expansion should boost growth by around 0.7pp in 2018 and 0.6pp in 2019, but will likely come to an end after that” – a statement Goldman capped off with a laundry list of reasons why spending and debt would undermine the world’s largest economy.

Goldman also noted that “projected increases in mandatory spending – this includes Social Security, Medicare, Medicaid, and income support programs – are primarily responsible” for what they believe will be an unsustainable level of spending over the long term.

The Congressional Budget Office estimates that the U.S. debt/GDP ratio is currently at 77%. In three years, Goldman expects this to hit 85% of GDP if current imbalances are sustained. Last year the CBO estimated that debt/GDP might skyrocket to 150% by 2047 – and that was before the GOP reforms.

Goldman’s analysts wrote that the “growth effect comes from the change in the deficit, not the level, and further expansion would put the U.S. onto an even less sustainable long-term trend. Second, some of the recent deficit expansion relates to changes unlikely to be repeated, such as the temporarily large effect of certain tax provisions.

Goldman also sees the GOP losing its grip on Congress after this year’s midterm election, which will at least make it “more difficult to further expand the deficit.”

The Treasury recently projected a massive increase in red government ink, announcing it would need to borrow $1 trillion this year, and more in years to come. Goldman noted that said borrowing was being conducted at “record low rates,” but this wouldn’t be the case indefinitely.

The Treasury’s need for more debt is inauspicious, given the recent surge in U.S. yields and a Federal Reserve that’s expected to begin a campaign to hike borrowing costs and withdraw liquidity. –CNBC

“We expect rising interest rates and a rising debt level to lead to a meaningful increase in interest expense,” Goldman said. “On our current projections, federal interest expense will rise to 2.3 percent of GDP by 2021,” and could hit 3.5 percent by 2027.

If you enjoy the content at iBankCoin, please follow us on Twitter

17 comments

  1. reversion

    Good thing we have the Tea Party in there…. lol

    • 0
    • 0
    • 0 Deem this to be "Fake News"
  2. mx2101

    If republicans remain in power long enough, deficit increase may be less than expected., It appears republicans intend to:

    1. Gut entitlements such as social security and Medicare.
    2. Eliminate social services and economic support to middle, lower and under economic classes.
    3. Move as many federal expenses to the states, giving Congress deniability, and providing chaos in each state to be taken advantage of.

    Basically, focus government on helping business and the wealthy class.

    Because these points are not politically correct to the general public, you might not see them included in an economic analysis.

    Should mention this is an observation, not a political rant.

    • 0
    • 0
    • 1 Deem this to be "Fake News"
  3. sarcrilege

    Are there still any muppets left for the vampire squid (((Blankfein))) to muppet?

    • 2
    • 1
    • 0 Deem this to be "Fake News"
  4. ironturd

    What did Goldman say about 17 kids getting shot up with AR 15s or are you waiting for Alex Jones’ take

    • 1
    • 0
    • 1 Deem this to be "Fake News"
  5. sarcrilege

    @turd, what did Goldman say? That it was another deep state false flag?
    https://tinyurl.com/ybruy7et

    • 0
    • 1
    • 0 Deem this to be "Fake News"
  6. ironturd

    Why don’t you ask your idiot family sarc? I pity them for having to deal with a fuckhead like you. How many times do they tell you to just shut the fuck up for once.

    • 1
    • 0
    • 0 Deem this to be "Fake News"
  7. The Maven

    Speaking of idiots, turdboi, I don’t remember you bitching every time a bunch of black kids are killed with guns (every fucking day) it is only when the white kids get offed that the libshits get offended. Seems to be the M.O. for the leftist dimwits.

    • 0
    • 1
    • 0 Deem this to be "Fake News"
  8. it is showtime

    not sure where they’re getting 77 debt:gdp
    must be core or stripped or whatever finagling

    usdebtclock has the 104 number
    also found here
    https://tradingeconomics.com/united-states/government-debt-to-gdp

    • 0
    • 1
    • 0 Deem this to be "Fake News"
  9. ironturd

    This isn’t selective outrage “The Maven”, those are completely separate issues you dumb hick. I’m pointing out how ridiculously selective ZPN’s coverage of news is. He’s doing Pepecash nutjob pieces while completely ignoring a mass murder school shooting committed by a mentally ill person who legally bought an AR 15.

    • 1
    • 0
    • 0 Deem this to be "Fake News"
  10. chuck bennett

    Selective issue is exactly what it is. People like Turd only get upset when whites are killed. They don’t give two shits about black or inner city children being murdered.

    Turd is a fucking racist.

    Regards

    Chuck Bennett

    • 0
    • 1
    • 0 Deem this to be "Fake News"
  11. ironturd

    When was the last time anyone on this site covered innocent black men getting gun downed by police

    • 1
    • 0
    • 0 Deem this to be "Fake News"
  12. ironturd

    If it takes a Black president to get Trump elected, I’ll take white children standing up for themselves to take on the NRA.

    • 1
    • 0
    • 0 Deem this to be "Fake News"
  13. ironturd

    ZPN is a fucking Pussy how about you moderate that

    • 1
    • 0
    • 0 Deem this to be "Fake News"
  14. sarcrilege

    yo, @turd, was what lying Goldman said about the 17 kids trotted without tripping over their scripted lines? Like this clown caught on video tripping over his rehearsed scripted story?
    https://tinyurl.com/ydbf7r59

    • 0
    • 1
    • 0 Deem this to be "Fake News"
  15. chuck bennett

    Turd you are indeed a racist.

    Your only saving grace might be that you don’t even know it yourself. Yet. Or maybe you do.

    One of the reasons the media doesn’t give a shit about black kids dying is it will point out an inconvenient truth.

    First is that, Banning or making guns illegal doesn’t work at all.

    Black people’s biggest enemy are other black or “brown people” . Which goes against the story, whites are black people’s biggest enemy.

    Selective racism, that’s what I call it.

    Regards

    Chuck Bennett

    • 0
    • 0
    • 0 Deem this to be "Fake News"
  16. sarcrilege

    @bennett, excellent observation
    https://youtu.be/f3PJF0YE-x4

    • 1
    • 0
    • 0 Deem this to be "Fake News"
  17. one-eighty

    Hey Ironturd. Why do you even bother arguing with these lying Republican scum?

    • 0
    • 1
    • 0 Deem this to be "Fake News"

Leave a Reply

Your email address will not be published. Required fields are marked *