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Fiscal Policy

All articles tagged with #fiscal policy

Bond Markets Warn: Cheap Financing Is Gone for Good
economy17 hours ago

Bond Markets Warn: Cheap Financing Is Gone for Good

Global bond markets are signaling that the era of cheaply financed government spending is ending as higher deficits, supply shocks, and AI-related investment push up inflation and long-term yields. In the near term, borrowing costs rise for U.S. homebuyers and companies; globally, yields in Japan and the UK have hit multi-year highs. Investors face dual risks: inflation eroding returns and rates moving higher in the future. Policymakers must choose between relief that could lift rates further and the need to curb inflation, marking a stark shift from the “free lunch” era of financing.

via Axios|
#bond-market#economy#fiscal-policy
Markets ride the Bliss trade on borrowed state backstops
economy18 days ago

Markets ride the Bliss trade on borrowed state backstops

Harvard economist Gita Gopinath argues that stock markets are buoyed by a 'Bliss trade'—the belief that governments will sustain large, lasting support via debt and central-bank backstops—despite energy shocks and rising public debt. The disconnect between rich markets and riskier bonds suggests fragility, and she calls for crisis response that is targeted, fiscally sustainable, and coordinated to avoid a long-term drag on growth.

via Financial Times|
#bliss-trade#central-banks#economy
Debt at 100% of GDP: A Trump-era surge that demands action
politics18 days ago

Debt at 100% of GDP: A Trump-era surge that demands action

John Avlon argues that America’s national debt has surged past 100% of GDP, a milestone he calls a clear, unsustainable trap. The piece contends deficits expanded under Trump and continued under Biden, reversing the Clinton-era balance and revealing a partisan pattern where Republicans decry deficits only when a Democrat is in the White House. Avlon urges a bipartisan approach—raising revenue, trimming costs, modernizing government, and spurring innovation—to grow out of the hole and prevent the U.S. from losing its economic influence.

via Rolling Stone|
#debt#deficits#economy
US debt tops GDP for the first time since WWII, prompting fiscal reform debate
economy21 days ago

US debt tops GDP for the first time since WWII, prompting fiscal reform debate

America's national debt now exceeds its GDP for the first time since World War II, with debt held by the public around $31.27 trillion and GDP about $31.22 trillion (gross debt near $39 trillion). The rise is driven by higher spending, tax cuts, interest costs, and aging-entitlements. The CBO projects debt held by the public to reach roughly $53 trillion by 2036, lifting the debt-to-GDP ratio to about 120% unless deficits are reduced, and groups urge a 3% of GDP deficit target to stabilize the path. Risks include higher interest costs crowding out programs, potential market confidence hits, and inflationary pressure, though some observers say the economy's growth and strong demand for U.S. debt keep the situation from an immediate crisis.

via CBS News|
#cbo-forecast#debt-to-gdp#economy
IMF urges targeted cash aid over broad fuel subsidies amid energy shock
economy1 month ago

IMF urges targeted cash aid over broad fuel subsidies amid energy shock

The IMF cautions that war-driven energy price spikes strain public finances and urges governments to drop broad fuel subsidies in favor of targeted, temporary cash transfers to preserve price signals and curb inflation, warning debt levels are rising and could reach about 100% of GDP by 2029; policymakers should still plan medium-term consolidation once the crisis subsides.

via Reuters|
#debt#economy#energy
Cap Social Security at $100K for the wealthiest retirees, editors say
opinion2 months ago

Cap Social Security at $100K for the wealthiest retirees, editors say

The Washington Post Editorial Board argues that with a looming federal debt and large deficits, Social Security is projected to pay six-figure benefits to some wealthy seniors; capping benefits for the wealthiest retirees (starting at $100,000 annually) would be a prudent first step in reforming the program and slowing spending.

via The Washington Post|
#compensation-and-benefits#fiscal-policy#government-pensions-and-social-security
America’s New Growth Playbook: Self-Reliance, Jobs, and Fiscal Roadblocks
economy2 months ago

America’s New Growth Playbook: Self-Reliance, Jobs, and Fiscal Roadblocks

IMF staff’s 2026 Article IV for the United States finds that the 2025 policy shift toward domestic self-reliance—emphasizing domestic manufacturing and energy, tighter immigration, deregulation, and tariff use—supported 2025 growth around 2.2% with unemployment near 4.3% in January 2026. Tariffs provide near‑term revenue but can raise inflation and dampen output; stricter immigration reduces the foreign-born labor supply and lowers activity, while deregulation and energy-focused policies boost dynamism. The outlook projects ~2.4% growth in 2026, core PCE inflation returning to 2% by 2027, and unemployment near 4% through 2026–27, but the current account deficit and NIIP are expected to widen and the debt-to-GDP ratio to rise toward about 140% by 2031 unless a credible frontloaded fiscal consolidation and revenue reforms are enacted. An alternative policy mix—permanent investment expensing, a destination-based tax, more open skilled immigration, and targeted safety-net reforms—could raise employment, reduce deficits and external imbalances, and improve distributional outcomes. The Fed should proceed gradually, maintaining policy credibility and financial stability as regulation and digital assets evolve.

via International Monetary Fund | IMF|
#debt#economy#fiscal-policy
IMF urges Japan to persist with rate hikes and resist tax cuts
economy3 months ago

IMF urges Japan to persist with rate hikes and resist tax cuts

The IMF told Japan to keep raising interest rates toward a neutral stance and refrain from further fiscal loosening, warning that trimming the 8% consumption tax on food would erode fiscal space and heighten risk from shocks. With inflation above target, the BOJ is gradually winding down stimulus and is expected to reach a neutral policy by 2027, while Japan must maintain a credible medium-term fiscal framework amid high debt and rising interest costs; any tax relief should be limited and temporary, and liquidity should be safeguarded with possible exceptional interventions, supported by a flexible exchange rate to absorb external shocks.

via CNBC|
#bank-of-japan#consumption-tax#economy
Japan vows steps against speculative moves as yen spikes amid election push
economy4 months ago

Japan vows steps against speculative moves as yen spikes amid election push

PM Sanae Takaichi pledged to take necessary steps against speculative or abnormal market moves after a yen spike and bond rout tied to expansionary fiscal policy and the BOJ’s slow rate hikes, while promising a two-year suspension of the 8% food sales tax; opposition parties floated funding a tax cut by tapping the BOJ’s ETF holdings or currency intervention reserves, prompting concerns about market impact and central-bank independence as the BOJ signals readiness for emergency bond-buying if yields rise.

via Reuters|
#boj#economy#fiscal-policy