Trump's Soaring Budget Deficit Risks Intensifying Market Frenzy
A growing budget deficit will force the US to borrow $ 1 trillion, which could exacerbate the condition on the US stock markets.
The Senate budget deal will add $ 300 billion to public spending and increase the deficit.
According to the economist of Bank of America, by 2019 the deficit will exceed 5% of the gross domestic product, which will be the highest rate since the Second World War.
In the short term, tax cuts and increased government spending will fuel the economy, stimulating growth, employment and wages. The deal concluded by the Senate could add up to 4.2% to economic growth in 2018 and 0.2% in 2019, raising the forecast for growth to 3.1% in 2018 and 2.3% in 2019.
The Dow Jones Industrial Average fell more than 1000 points on Thursday, while the S & P 500 fell 3.75%, as a result of which the decline from the peak of January 26 exceeded 10%.
/Source: Bloomberg/
Feb. 8, 2018