Cyclically Adjusted Federal Finances Steadiness

Only a reminder – the finances stability is endogenous (so long as one believes in a fiscal multiplier).

Determine 1: Federal finances stability to potential GDP (blue), and cyclically adjusted finances stability to potential GDP (tan). NBER outlined peak-to-trough recession dates shaded grey. Orange shading denotes Trump administration. Supply: CBO, NBER and creator’s calculations.

This publish prompted by a reader’s mendacious assertion that Trump was righting the fiscal ship earlier than the pandemic (not that I count on him to grasp what “endogenous” means).

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