"Despite steady growth, Washington's current fiscal trajectory has economists asking why policymakers are acting as though the U.S. is facing a downturn. In an exclusive interview with Fortune, Moody's Analytics chief economist Mark Zandi said that while the White House may be aiming to lift sentiment ahead of midterms, the Fed fears rising unemployment and political blowback if America enters a recession."
"At the onset of the coronavirus pandemic, the U.S. government approved record-breaking spending bills totaling $5 trillion in a bid to keep businesses afloat, people employed, and the economy from tipping into recession. Five years on, and somehow, the American economy has not only avoided a contraction but has managed to grow-an outcome many investors thought impossible. Come 2025, the White House has announced another major round of stimulus in the form of President Trump's One Big, Beautiful Bill Act."
"Projections from the nonpartisan Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) place the price tag of the act-the additional burden onto the national debt-at around $3.4 trillion. While most economists agree that the revenues generated by tariffs will offset the majority of this spending, the fact remains that an eye-watering amount of stimulus is being pumped into the economy at a time when it is not only already stable, but growing."
The U.S. approved roughly $5 trillion in pandemic-era spending and the economy has continued to grow. The White House announced the One Big, Beautiful Bill Act for 2025, projected to add about $3.4 trillion to the national debt. Tariff revenues may offset much of the cost, but large stimulus is being injected while the economy is stable and unemployment is low. Federal Reserve policymakers have signaled openness to multiple rate cuts despite inflation hovering around 3 percent. This combination of fiscal stimulus and potential monetary easing raises risks of overheating by 2026 if inflation rebounds and increases concerns about long-term debt sustainability.
Read at Fortune
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