GDP Growth Fueled by Government Spending and Debt, Raising Concerns Over Sustainability
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Government spending, deficits, and debt played an outsized role in the high GDP growth rate. Consumer spending is heavily reliant on credit card debt.
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Business equipment spending has been flat, as has manufacturing output. Government is pumping up demand but supply is not keeping pace.
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Despite moderating inflation recently, too much money chasing too few goods risks higher inflation.
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The budget deficit grew over 50% while GDP grew less than that, taking $1.55 in deficits to generate $1 in growth.
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It took over $2.50 in new debt to generate $1 of GDP growth, an unsustainable way to spur the economy.