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'Stronger for longer' GDP could allay US fiscal fears
Much of the debate around U.S. public finances centers on the assumption that structurally higher interest rates will push debt servicing costs to intolerable levels, risking a fiscal catastrophe that can only be averted through severe austerity. While borrowing costs and spending are justifiable sources of angst, this ignores the other side of the government's ledger. What if interest rates and bond yields stay 'higher for longer' partly because the economy is 'stronger for longer'? More vibrant growth boosts tax revenue, but this often gets lost in the noise surrounding the trajectory for spending. In its February ... (full story)