Predicting the 2017 economy by following the money

Stocks and bonds have been going nuts, in violation of money rules
  • Federal spending in 2016 has been about $3.6 trillion. Our gross domestic product (GPD) is about $18.7 trillion, thus spending is about 19 percent of GDP.
  • Tax revenue is about $3 trillion, a little short, hence a deficit of about $600 billion. At 3 percent of GDP, the deficit is not good, but it is survivable.
  • Unfortunately, future promises of spending on Social Security and Medicare will soon begin to widen these percentages.
  • Under current law, tax revenue will not rise much from its current 16 percent of GDP, but spending will rise within 15 years to about 28 percent of GDP -- not survivable.

In today’s accepted wisdom, Donald Trump as president means that 2017 can’t be predicted. At all. Endured, possibly enjoyed, but it will be a complete mystery.