The U.S. economy is slowing, not accelerating, despite hundreds of billions in deficit spending combined with trillions in tax cuts, Axios reported on Tuesday.
The sharp increase in spending that has occurred has resulted in a GDP on pace to grow approximately only two percent this year, which is about the average for the last eight years.
"The direct impacts and uncertainty of tariffs, trade and other policy disruptions have mitigated the intended stimulus from the individual and business tax cuts," Steve Skancke, chief economic adviser for investment manager Keel Point and a Treasury Department official during the Reagan administration, told Axios.
Nobel laureate Joseph Stiglitz pointed out in an op-ed for Project Syndicate that "America should be in a boom, with three enormous fiscal-stimulus measures in the past three years."
He warned that "If it takes trillion-dollar annual deficits to keep the US economy going in good times, what will it take when things are not so rosy?"
In an attempt to push the American economy to higher than three percent annual growth, Congress last year signed a two-year deal to boost spending $300 billion, according to Axios.
The Treasury Department announced this week that the U.S. budget deficit rose by almost $120 billion in July, which is a 27-percent increase from a year ago and puts the fiscal year deficit through July at $866.8 billion. That is higher than the entire deficit from fiscal 2018 and on pace to top $1 trillion, which would make it the largest deficit in eight years.
Skancke added that business investment has fallen in the first two quarters and continued corporate buybacks show that companies have a "lack of confidence in the outlook for the economy."
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