I just listened to an interview with Stanley Druckenmiller on CNBC and Stan made an insightful comment about the high spending of the US government, that the spending is going to crowd out US innovation spending that would otherwise have taken place... amen to that...
The latest data on the deficit is for March this year, when in the March deficit amounted to $236 billion, and on the basis of 12-month rolling it was $1.66 trillion - which if we divide by the current nominal GDP from Q1 2024 will give us a level of 5.87% of GDP - in fact… the lowest data point in 15 months... see Figure 1.
Interestingly, already in the years 2016-2020, the rule of falling deficit level during economic expansion (when the labor market was moving towards full employment) was broken - see Figure 1, blue arrows.
Stanley also said that deficit levels like today are unheard of in a full employment situation - and indeed current unemployment levels even suggest a budget surplus... see Figure 2.
The next data on the US deficit for April will be available next Friday, May 10.
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