By PPI Chief Economist Dr. Michael Mandel.
The United States is not likely to run out of ammunition for its “fiscal stimulus cannons” in the immediate future. However, important political and economic forces can limit how often the cannons can be shot. Moreover, fundamental changes in the global economy—in particular, the increased emphasis on supply chains and data-driven consumption, investment, and trade—make it harder than ever before to determine how close the fiscal cannons are to overheating.
From a fiscal perspective, the U.S. government is in the enviable position of being a safe haven for investment in a very uncertain world even as the country’s debt-to-GDP ratio climbs. Even if a large unnamed country decides that it wants to stop buying U.S. Treasury securities, plenty of other foreign investors are ready to shift money to the United States to take up the slack.
