A Biden boom of immense proportions

The Biden Administration is moving swiftly from emergency stimulus support to longer-term infrastructure spending to keep the US economy stronger for longer. Bloomberg has more:

  • An overall spending package worth between $2-4tr will be proposed.
  • It will focus on roads and green infrastructure.
  • It will be funded by tax hikes for corporations from 21% to 28% and higher personal taxes for $4ook+ earners and higher capital gains taxes for $1m+ earners.
Soak the rich!

Soak the rich!

Goldman has more on what this means for growth:

  • Details on the next fiscal package are scarce. At this point we expect the White House to propose at least $2 trillion for infrastructure, though this could reach as much as $4 trillion if the proposal extends to other areas (e.g., child care, healthcare, or education). Increases in the corporate and capital gains tax rates look likely to finance a portion of this, though we believe it will be difficult for Congress to agree on more than around $1 trillion in such offsets.
  • While the next major fiscal proposal might come with a large headline number, itis likely to have a much smaller impact on growth in 2021 and 2022, as the spending will be more evenly distributed over several years and some of it will likely reflect spending that would have happened in any case. Offsetting tax increases could also incrementally dampen the effects.
  • As we now expect a somewhat slower drop-off in fiscal support in subsequent years, we have also raised our GDP growth forecast in 2022 by 0.6pp to +5.1%on a full-year basis (vs. +3.8% consensus) and by 0.5pp to +2.9% on a Q4/Q4basis (vs. +2.6% consensus).

I expect a big infrastructure package via the budget reconciliation process. So, Goldman is going to have to revisit these numbers upwards.

That is US growth above 6% in 2022 and above 4% for years after that.

David Llewellyn-Smith
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Comments

  1. I’m seeing consumer electronics cheaper in the FSU than in America right now (even including 20% VAT). Inflation is real, or at least retailers and manufacturers are ripping off stimmy-enriched consumers.

  2. Jumping jack flash

    4 trillion? Its starting to get serious i guess.

    Where are the 2 trillion dollar handouts to get leveraged into debt? This is where the real action happens, the leverage and the tidal wave of debt that follows to lift the global debt economy to literally infinity and beyond.

      • Hay moron hard currency is inherently deflationary so your point is again … not that capital loves that action anyway … so maybe the drama is not the currency but the political advantage of some regardless of soft or hard currency … get in the pit kid …

      • Jumping jack flash

        Debt looks, smells and tastes like real money. That’s one of the great things about it. The banks can make as much as they like of it and sell it to whoever can afford it. You can do whatever you like, as long as you can pay the price.

        Your link is oldschool thinking.

        And yes, i understand that if all money is debt, then debt is inherently deflationary because of the interest, and thats why there exists the growth mantra.

        When the system is turned up to 11, watch what happens. It’ll be magical.

        • “Debt looks, smells and tastes like real money”

          In your eyes. And all those who imagine the economy rules the world.

        • 200 years of the ‘growth mantra’ on a finite planet has brought the world to it’s knees. It’s too late now for ‘de-growth let alone a so-called shiny new green economy. Collapse is baked in.

          But sure, pile on the debt and party til it all turns to dust, while fewer and fewer can afford to play the game and in the end there’s only one chair left, then there’s none…..

  3. The man means business. About bloody time someone spent US dollars at home rather than on dubious causes abroad.

    • If you wait for it…
      Not one crackPOTUS rule was without a war.
      President Kamala will not be any different.

    • Jumping jack flash

      At home you say.
      Well i guess it is true that the US does still perform some manufacturing.

      Less and less though, because its nasty work, and very bad for the environment. Biden will probably put a stop to it.

  4. Soak the rich, this phrase receives a mention above. As opposed to the old and tired trickle down war on the poor of the last forty years. In the words of British Labour Chancellor of the Exchequer, Denis Healy, in 1974 to describe his policy of increasing wealth taxes: “We will tax them until the pips squeak.”
    And a good thing too. What is the stat again? Roughly the wealthiest 50 Americans have as much wealth as the poorest 150 million Americans. Get those pips squeaking!

  5. Guns and Butter………they are trying to do a LBJ redux……..the starting debt is humungous this time. It is those who come next who will reap the whirlwind as in the Sixties/Seventies.

  6. It’s a Trump boom.

    Q3 growth was 33%. Trump left office with COVID cases trending down since Christmas/New Year, rolling out recently discovered COVID vaccines which he promised by the end of 2020 (everyone laughed at the idea), stock market at all time high.

    Before the pandemic, US unemployment was at a 60 year low.

  7. Ailart SuaMEMBER

    Giddy-up MMT. The alternative would have made the 1930’s depression look like a Sunday-school picnic. The world is in too deep – there’s no conventional, austerity fix method for climbing out of this neoliberal-created shyt hole. Thirty years from now, around 50% of the population will be unemployed; receiving the ‘living wage’, in a cashless, ultra controlled society, with their heads buried in their mobile devices as their brain-cells progressively shrink.

    The only thing that has a chance of preventing this, is if current younger generations get up off their arses and demand changes to the Constitution and electoral system that restores democracy, initiates genuine government accountability and builds a ‘firewall’ between governments and self-serving elites.

    • Jumping jack flash

      You had me up until the 50% unemployed.

      The goal is debt hyperinflation.
      Even the lowliest deliveroo driver will be able to pull in $100k

    • News for you bloke. In 30 years half the population will dead through war, starvation and no doubt pestilence.

      And there’ll be no internet..

    • “These guys are blocking their fellow Americans from the chance to leave their kids a safe, sustainable world”

      It really doesn’t matter if the financial looters ruin it or the government does – the amount of resources and mining required for the whole growth paradigm to continue, green or brown, will fry the planet either way. Truth is we’re outta stuff and the so-called ‘green’ re-runs of the 50s are a dead duck.

      There is no safe, green sustainable world for today’s kids or any future kids.

      https://www.oftwominds.com/blogmar21/deflationary-tsunami3-21.html.