Capital Crisis: Is America Prepared for the Financial Woes That Come Next
The Biden administration is launching the biggest fiscal expansion ever by pumping $ 1.9 trillion into the U.S. economy. That amount is equivalent to about 9 percent of Gross Domestic Product. The prize sought is economic growth in 2021 of 6.4 percent and 3.5 percent in 2022. The unemployment rate will be cut to half from 8.1 percent to 4.2 percent if the fiscal expansion goes according to plan. But will it?
The impact on federal finances already in dire straits will be devastating. The federal deficit in 2020 was 14.9 percent of GDP and is forecast to be around 10 percent for 2021 and 4.6 percent in 2022. Even with a relatively rosy outlook on growth and interest rate levels, it will fluctuate between 3.6 percent and 5.7 percent over the next ten years.
In 2019, the United States accounted for 41 percent of the global savings deficit. But back then the deficit on the current…