http://www.economist.com/blogs/freeexchange/2011/03/fiscal_policy?fsrc=scn/tw/te/bl/goldmanestimate
Absent the cuts, growth would roar ahead at 5% for the year (which is more in keeping with a rebound from a recession of the depth America experienced).
Republicans, however, want to trim a a total of $61 billion from the current budget—more than the $25 billion over all of 2011 that Goldman used as a placeholder. And so Goldman estimates that these cuts will take off an additional 0.5 to 1.0 percentage points from annualised growth rates (which is what is always reported) in the second and third quarters.
That's nothing to sneeze at, of course, especially given the fact that Republicans have made no pretense of using cost-benefit analysis to identify wise cuts, and given that there is no immediate crisis, and given that the main fiscal imbalance is associated with long-run growth in health costs, not short-run growth in non-defence discretionary spending. But it's a smaller impact than the $300 billion in lost growth many reported, and it's much closer to Mr Bernanke's assessment. So there: mystery solved.
Subscribe to:
Posts (Atom)
.jpg)
Posts
