Jem, sweetie pie, I feel like I have to constantly step in to protect you from the real world. So here I go again, just doing my duty. First make sure you never get caught comparing one persons nominal GDP estimate against another's real GDP estimate. At the beginning of a year the estimates for the year are often wildly off. The Fed uses Real GDP when they quote it (the nominal GDP is reserved for Donald, Infowars, and Rush, except when they are quoting the Fed. Estimates before the end of the first quarter are always bullshit of course. You can expect real for 2018 to be on the highside of 2.5 -3.5 . If you forced me to guess today I'd say it will come in at 2.6-3.1 Split the difference and you get 2.9 . I'll put as much as 35 cents on that. Now you already know that in a fiat money regime government deficit equals the additional money spent into the economy over the amount taken back out via taxes and fees. The Trump admin is leaving a big chunk of extra money in the economy. If this was distributed on the buy side it could cause a lot of inflation. However, it is distributed with a skew to the supply side, so it's inflation effect will be more muted then if you just turned a bunch of red necks loose at a Monster Truck dealer. In the GDP formula government spending looms large and positive, so when the Spendthrift Republicans are in charge you can always count on a nice GDP bump from unbridled spending on themselves. The Republicans also like to cut personal taxes (mostly at the high end of course), so that gooses the deficit and thus the GDP because it leaves a lot more money in the economy than is taken back out. Of course there is going to be some up ticks in inflation because of the Obama recovery and hence full employment is nearing. But Republicans are very good at keeping wages down, and labor in their place. It's a Republican specialty. After all, we must not forget that America was built of cheap labor. (A bumper sticker to that effect would be appropriate, don't you think?) It helps to have all the extra money spent into the economy go to the top end of incomes, so inflation will be contained. That extra money at the top doesn't get spent, it just gets saved and invested. That adds to the GDP more than it subtracts via inflation, compared to demand side stimulus which also increases nominal GDP via stimulated consumption, but balances that with greater inflation. But this is a midterm election year, so by December Spence could be President and Trump taking ping pong lessons courtesy of the tax payer. So the bottom line here, honey, is that we'll have to wait until after the midterm election to even attempt a somewhat accurate projection. At this point there is only one thing we can all count on: Mexico is NOT paying for that Damn Wall!.
