Demand Side Economics

"Deficits don't matter." -- Dick Cheney

   The Congressional Budget Office forecasts that the U.S. economy "will expand solidly through this year and next," driven by increases in demand for goods and services.
   In turn, this will attract more workers, which should reduce the unemployment rate and boost wages, the CBO said.
   As the economy improves, however, this will also push up inflation and interest rates, but over all, the economy is likely to grow more quickly through the next ten years than it has in the past ten years.
   The downside, however, is that the federal deficit will increase -- relative to the size of the economy -- for the first time since 2009.
   If you make it, they will buy, say the supply siders. But without jobs and income, there is no demand, and no amount of increasing supply can induce people to buy anything with money they don't have. Another issue is that wages have not kept pace with inflation, and the unemployment rate, while stable, is not yet at the level economists call a full employment rates. Perhaps that will happen over the next ten years, assuming the CBO predictions are good.
   As for a federal deficit, sometimes that's needed to help kickstart a sputtering economy and to help it along while it achieves momentum. So has the economy done that, and will it keep rolling despite slowdowns in the rest of the world?
   Good question. Stay tuned.