Chart of the Day
Posted at 9:45 a.m. on Nov. 1, 2013
– FT Alphaville provides this chart from BCA Research showing the collapse of infrastructure spending over the last decade.
“There are reasonable debates to be had about the necessity (or non-necessity) of making credible commitments to future fiscal consolidation… But that’s different from arguing that tax and spending policies right now should focus on, or even care about, reducing the budget deficit. And there’s a good chance that we’ll look back with regret at the tightening represented in the chart above, which has taken place during a time when interest rates have been scraping the ground.”
“It’s also likely that much of the investment that has been forgone in the name of fiscal consolidation will have to be made eventually anyways — only it will be made when rates are higher, exacerbating the long-term fiscal outlook rather than improving it.”