Slower Growth in Q3

Slower Growth in Q3

October 25, 2021

Keynesianism can temporarily giveth, but ultimately always taketh away...and then some.

When the US fell into the COVID crisis, the federal government went on a massive spending binge.  Pre-COVID, in the twelve months through March 2020, federal outlays were $4.6 trillion, or 21.4% of GDP.  In the next twelve months outlays soared to $7.6 trillion, or 36.2% of GDP.  Outside of wartime, we know of no other time when the government has ramped up spending that much or that fast.  As a result, as well as very easy money, the economy partially bounced back faster than it would have in the absence of the extra spending.

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