We are about to witness the tug-of-war between fiscal and monetary policy.
From the St Louis Fed - What is Potential GDP and Why Does It Matter?
The current situation is that actual GDP is above potential GDP.
3) The Great Tug-of-War Between Fiscal and Monetary Policy
This all sets the stage for an economic collision. There is no good which comes from fiscal and monetary policy dynamics in opposition. Will there be a recession? There is always a recession in the wings so discussing this point is moot. But there is little debate that the GOP tax plan is designed to put more money into the hands of the 0.1% so that there will be more private investment.
But if the economy is already running above potential - there will be few opportunities to invest in the economy and the "investment" will be to the immediate net worth of the wealthy.
Other Economic News this Week:
The Econintersect Economic Index for December 2017 marginally declined and returned to territory associated with slower economic growth. Still the economic growth forecasts in 2017 have remained in a very narrow band. Six-month employment growth forecast is now indicating marginally improving growth.
Bankruptcies this Week from bankruptcydata.com: Privately-held Woodbridge Group of Companies, Protea Biosciences Group, RDX Technologies (f/d/b/a Ridgeline Energy Services)
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
