The US Deficit Economy: Project Syndicate

The Trump administration is delivering shocks to the economy before experts can assess the consequences, suggests economist Joseph Stiglitz. All that is sure about the US economy is volatility and uncertainty. Reductions in the interest rate by the US Federal Reserve as central bank have little effect. “Long ago, John Maynard Keynes recognized that while a sudden tightening of monetary policy, restricting the availability of credit, could slow the economy, the effects of loosening policy when the economy is weak can be minimal,” explains Stiglitz. “Large corporations are still sitting on hoards of cash: it’s not a lack of liquidity that’s stopping them from investing.” Reduced interest rates contribute to lower exchange rates and, as Europe has learned, interest rates that go too low weaken the economy. The US unemployment rate is low, and growth continues, but the quality of jobs is questionable, wages for many remain stagnant, business and infrastructure investment is low, budget and trade deficits are climbing, and inequality is widening despite ample fiscal stimulus in recent years. Stiglitz concludes that the US and global economies could suffer because of a widespread lack of understanding of economics. – YaleGlobal

The US Deficit Economy: Project Syndicate

The US economy may look good on the surface, but budget and trade deficits climb while quality of jobs, infrastructure and business investment decline
Joseph E. Stiglitz
Monday, August 12, 2019

Read the article from Project Syndicate about deficit challenges to the US economy.

Joseph E. Stiglitz, a Nobel laureate in economics, is University Professor at Columbia University and Chief Economist at the Roosevelt Institute. He is the author, most recently, of People, Power, and Profits: Progressive Capitalism for an Age of Discontent (W.W. Norton and Allen Lane).

US deficits spiked with 2008-2009 global debt crisis, declined and climb again

(Sources: The Balance and the US Census Bureau)

© Project Syndicate - 2019