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Businesses An Important Growth Driver Amidst Twin Deficits

MACRO ANALYSIS
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  • The full release of the U.S. national accounts for Q1 continue to lay bare the scale of private sector net lending that is occurring under large fiscal deficits and sizeable current account deficits.
  • Coming out of the post-pandemic period, which saw historically large transfers from the government to the private sector (and specifically households), the private sector is currently a net lender to the tune of more than 4% GDP.
  • With the exception to the build-up to the dotcom crisis and then the Great Financial Crisis, this is close to the long-term historical norm and on its own isn’t particularly problematic.
  • However, the breakdown within the private sector is more revealing.
  • We explore these themes further, including the particular reliance on the business sector as an upcoming growth driver, in parts two, three and four.

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  • The full release of the U.S. national accounts for Q1 continue to lay bare the scale of private sector net lending that is occurring under large fiscal deficits and sizeable current account deficits.
  • Coming out of the post-pandemic period, which saw historically large transfers from the government to the private sector (and specifically households), the private sector is currently a net lender to the tune of more than 4% GDP.
  • With the exception to the build-up to the dotcom crisis and then the Great Financial Crisis, this is close to the long-term historical norm and on its own isn’t particularly problematic.
  • However, the breakdown within the private sector is more revealing.
  • We explore these themes further, including the particular reliance on the business sector as an upcoming growth driver, in parts two, three and four.