10 July 2023
US growth remains well below Federal Reserve projections, despite massive monetary and fiscal stimulus. Negative real wage growth and high debt levels indicate the failure of the trickle-down effect. Consensus real GDP growth for 4Q23 is only 0.2%, far below projections. The Biden administration’s optimistic assumptions still result in a substantial deficit of 5% of GDP in 2032. Neo-Keynesian budget approaches leave households with less real money and contribute to increased debt and inflation. Stimulus measures like the American Rescue Plan have not delivered the intended benefits, with households experiencing a decline in liquid assets. Government expenditure programs exacerbate inflation and recession risks by artificially tightening labor markets and supply chains. Clean energy and infrastructure spending programs, already thriving sectors, add to inflationary pressures and financial strain. The Federal Reserve’s attempts to mitigate inflation may inadvertently lead to a recession. In the face of failures, neo-Keynesians advocate for more massive government spending programs.