U.S. Economic Growth Update

(n)GDP and the Strike on The Fed Put

This note starts with the premise that, for the time being, all near-term economic forecasts are sus (more than usual), if not outright worthless. Exhibit A would be what up until now has been the gold standard of this cycle, the Atlanta Fed GDPNow model, which now prominently features a “gold adjusted” forecast.

This is not to say that investors are rudderless or lost in the sea of political uncertainty, with macro data slapping around like a bullwhip. These topics have been covered ad-nauseum in these pages and in others. The vibes and political uncertainty are the knowns. This note seeks to explore the big unknowns by looking at the Big Macro Picture (BMP™️).

The starting point of the BMP™️ is not an endless parade of macro indicator porn to spin a narrative. The starting point of the BMP™️ is an understanding of the interplay between public and private sector balances and the real economy, to get a better read on the growth prospects of the U.S. economy.

The prior two economic crisis, the GFC and the economic sudden stop of the global economy due to the covid pandemic, provided us with a real-time experiment in the efficacy of fiscal stimulus versus monetary stimulus.