Once the new administration in the U.S. is defined and the entry of an accelerated vaccination process, we can already do some analysis regarding this year’s economic prospects, stripped of economies and a simplicity that helps us understand, even if to disagree, on topics.
American economy in large numbers:
This will be an important point in the analysis of the execution capacity of the electoral platform of the next president. At the moment we have a federal’s gauge of more than $27 trillion, of which more than $7 trillion is in the hands of foreign countries (China being the main). In addition, we have some numbers to consider:
- “liability” of Social Security $20 trillion.
- Medicare liability: 32.457 trillion
- Trade deficit $867 billion;
- Trade deficit with China $297 billion.
- GDP $21.275 trillion.
- Unemployed 10.645 million;
- Student loans:$1.722 trillion;
Some Challenges to be faced
- As we see, the deficit has reached a level value that has been achieved by the country before. In 1960 it represented 53% of GDP in 1980 – 34% in 2000 – 39% and now we are at 146%.
- This will be President Biden’s first major challenge. Honor campaign promises without generating inflation and without overly increasing domestic debt.
- Still in these numbers, zero the debts of students who are in the house of $1.722 trillion, with this liability already in public accounts.
- With regard to creating a comprehensive medicine that meets, by State, the entire population and taking into account that the sum with Social Security and Medicare, has a “liability” of $53 trillion.
- As for unemployment that has a contingent of more than 10 million unemployed, if it is added to the 11 million undocumented (which unofficial figures speak of 26 million) will have an equation to organize, not to overload the deficit with more help to the unemployed and not to lower the average salary of those who have regular documentation, whether American or just residents.
- Trade deficit of $867 billion, of which about 40% is in the balance with China, which will charge a high bill to regularize the relationship with the U.S., and Biden intends to re-implement multilateral agreements that generally generate even more deficits and are more time-consuming.
Localized challenges:
New York and California, which is already the heaviest taxes in the country and still has chronic deficits in its accounts, will have to stem the exodus of its residents, which would lower its revenue and create other ways of attracting new residents
The good news.
We will have an explosion of growth due to extreme liquidity of the market and individuals due to the aid of more than $7 trillion, injected into the market because of the pandemic.
Vaccination should force the reopening of businesses, and businesses ending with any reason to keep economies closed.
The world as a whole should reopen and with at least one excellent second semester.
The deregulations that have given a great deal of freedom to new private sector initiatives that will continue to be the country’s locomotive.
The regularization of immigrants will make the resources that were obtained and mostly sent to their countries of origin stay in the USA and are invested in their own homes, vehicles and other consumer goods.
In the medium term, social security will receive a breath of new resources from regularized immigrants.
With the control of the two legislative houses, the new president will be able to make any and all changes he wants in the rules of the game, including the quantitative composition of the Supreme Court, which will give greater speed in the implementation of his plans.
Surely, even while wondering is the motley fool worth it – we will have an auspicious year in economic terms and a stock exchange with extreme appreciation
Carlo Barbieri