Tuesday, November 1, 2011
Federal Gov't running largest surplus in six months, threatening economy
Deficits add to private sector financial balances and surpluses reduce those balances. That's why running a surplus is bad for the economy.
The most recent data from the US Treasury shows that the government is now running the largest surplus in six months. What this means is that the rosy, 2.5% GDP (preliminary) number we saw for the third quarter is not going to be repeated in the fourth quarter if this surplus is not reversed soon.
Expect the economic data to start getting very, very, bad.