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Next tightening phase may have sharper drop because deficit went from $1T in 2019 to $3T in each of 2020 & 2021 but is back to $1T in 2022
Research
View above about Model Issue: US real GDP gap % change during ST debt phase relative to mean and phase 4
The U.S. government spent at least $5.2 trillion to combat the covid-19 crisis. It stands as one of the most expensive, ambitious experiments in U.S. history. And it succeeded.
. . . The $5.2 trillion total is the estimated impact on the federal deficit of about $5.9 trillion in relief authorized by Congress, as calculated by the Committee for a Responsible Federal Budget, a nonpartisan think tank.
Those figures don’t include about $700 billion authorized by Biden and former president Donald Trump in the form of actions like disaster assistance and tax relief, moves which have limited impact on future deficits — about $100 billion.
They also don’t include the $3.3 trillion and counting the Federal Reserve spent to stabilize the economy, largely through buying assets to inject cash into markets. Such purchases have almost doubled the size of the Fed’s immense balance sheet, but they don’t add to the deficit.
. . . Without big changes, such as the passage of Biden’s ambitious infrastructure and families plans, the economy is set for a bit of a bumpy landing after the expected boom of 2021 and 2022, one that will probably come just as the 2024 presidential campaigns are shifting into gear.
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