The U.S. economy slows down Biden’s fiscal policy returns to focus, Wall Street warns, the probability of breaking the situation is rising | Anue juheng-US stocks

After months of debate, the Democratic Party’s large-scale budget has finally “almost” reached a consensus. However, in fact there are major differences and lack of details. Wall Street believes that the large-scale fiscal policy proposed by US President Biden is unlikely to have results in the near future. As the deadlock continues, the probability of breaking the game is increasing.

Barron’s reported that the market is currently ignoring fiscal policy, political disputes over taxation, and the Democratic Party’s deadline for passing bills before the end of the month. However, these issues may return to focus after the third quarter GDP growth rate of the United States is announced on Thursday.

The estimation model of the Federal Bank of Atlanta shows that the seasonally adjusted annual GDP growth rate in the third quarter was only 0.2%, which was lower than the previously expected 1.2% and also lower than the 6.7% expected by Wall Street economists in the FactSet survey.

Citi economists predict that GDP will grow by 2.4% in the third quarter. The main reason for the slowdown is the supply bottleneck, not the demand. Although supply pressures may begin to improve, consumer confidence has been shaken recently.

The poor GDP performance may bring the current fiscal policy to the attention of people again. Although increased spending on social care and new infrastructure may exacerbate existing labor shortages, after the outbreak, fiscal policies have had a significant effect on promoting economic growth.

However, the current large-scale fiscal policy has gone from the original 6 trillionDollarSignificantly downgraded to 1.75 trillionDollarThere are still obvious differences between the moderates and the progressives on the scale and content.

Brian Gardner, political strategist at investment bank Stifel Washington, believes that under the current situation of differences, the Democrats are unlikely to reach an agreement in the near future, but to finalize it before the year-end holiday, but Biden is forced to compromise and cut fiscal policy spending, which may be difficult. Effectively stimulate economic growth and cause some problems that hinder economic growth to worsen.

As long as monetary policy remains very loose, the market may not care much. However, Gardner said that the probability of fiscal policy failure is rising, and if the negotiations eventually break, the U.S. economy may be affected.

Katie Nixon, Chief Investment Officer of Northern Trust Wealth Management, believes that the final fiscal policy scale may be smaller, making the amount of bills that the government needs to pay lower. Increasing the labor participation rate is the key consideration of the bill. Judging from all fiscal policies last year and this year, unless the subsequent policy stimulus can successfully flow to wages or enterprises, it will face a fiscal drag next year.


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