A trillion is one million million. When you write it out it has 12 zeros and looks like this: 1,000,000,000,000. Yea, It’s HUGE.
In 2014 - in the midst of the economic recovery - the deficit was a paltry $486 billion.
By next year, according to the White House’s estimate - it will be more than $1 trillion or 5.1% of GDP.
What happened?
It’s hardly an economic koan. The US government is spending more than its making – way more. And, rising rates won’t just affect your new mortgage. It also increases what Uncle Sam owes.
Since WW2 the US breached this 5% ratio only twice. In 1983 and from 2009 to 2012 extreme government spending helped revive the economy and reverse nearly 10% unemployment.
Today, unemployment is 3.9% and the economy is strong.
What will the government do when there's another major downturn? In the light of the $1T already owed, probably not so much.
Weekly Update through August 10, 2018 The S&P 500 lost -18bps, even as the Dow Jones dropped -44bps, the Russell 2000 gained 82bps, the Nasdaq added 40bps.As for US bonds, they climbed 42bps.
Globally, the MSCI World Index was down -64bps the Barclays Global Aggregate Bond Index lost -11bps.
The Euro Stoxx 50 lost -1.57% in local-currency (Euro) and -3.21% in USD. Meanwhile, the Topix declined -1.29% local-currency (Yen) and -83bps in USD.
