Debt Be Not Proud

   The federal budget deficit, now at $900 billion this year, will likely exceed $1 trillion in three years time, according to the Congressional Budget Office, and the total federal debt will nearly match total national output (GDP) in ten years.
   Meanwhile, economic growth is slowing, according to several government agency reports, and will be closer to 2 percent this and will go below that next year. Last year, total output of goods and services rose at a 3 percent rate.
   Watching all this, the Federal Reserve Board voted to keep its key target interest rate below 2.5 percent  as a way to keep the overall economy steady but growing.
   Even so, the president didn't like it, and insisted that the Fed should lower interest rates even more to boost the economy to his preferred 4 percent growth. 
   Separately, the Commerce Department said GDP increased 2.2 percent in the fourth quarter, down from 3.4 percent three months earlier.
   And a study by economists at the Federal Reserve Bank of New York said GDP growth for 2019 will be about 2 percent, lower than an earlier forecast.
   The good news is that 196,000 people found new jobs in March, even as the unemployment rate was unchanged at 3.8 percent, according to the Commerce Department's Bureau of Labor Statistics. But the labor force participation rate, which most economists see as a more reliable statistical indicator of employment health, has been holding steady at about 63 percent for a year, and the ratio of workers to total population has been about 60 percent since last October.
   So even though the labor market "remains strong," the Fed noted, "growth of economic activity has slowed" since the end of the year.
   So what does it all mean? A "noticeable loss of momentum," to use the New York Fed's phrase, coupled with the government's sharp rise in spending, an increasing budget deficit and a total debt that will soon match production, could well mean serious trouble ahead.
   Or it may not. Unlike a family, a business or a state, where spending more than income spells financial disaster, a nation can indulge in deficit spending and a rising debt for a long time without consequences because a nation owes itself.
   As former Vice President Dick Cheney once put it, "Deficits don't matter."
   Or do they?