Yet economists increasingly see lasting damage from the drawn-out budget bickering, with a new study contending that political standoffs have cost the economy 900,000 jobs this year alone.
The 'economists is the latest Macroeconomic Advisers piece of heteroskedasticity. It's like a gnat identifying the elephant by looking two hairs ahead. All of their numbers, including Political Calculations use mostly accounting to get a two quarter look ahead. The reason is that the fake economy is about half of what's happening, and that includes mostly a biased and small sample of any trading distribution. We have peaked. At an inflection point the estimating coefficients are being negotiated, not estimated. In particular, one thing looms, what does DC do when interest costs run up to 30% of budget in any strong growth scenario. Economists don't know what the tax receipts will look like, that is the uncertainty. If politicians cannot resolve a budget out say, two years, then firms might set aside too much for an expected tax hit two years hence, and the market will try to bubble it out for another year.
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