World War D—Deflation
By John Mauldin
May 27, 2015
Source: Ned Davis Research
In other words, fiscal tightening has acted as a counterweight to unprecedented monetary easing.
- Japan has postponed the planned 2015 consumption tax increase.
- China has started to announce new spending projects intended to keep the economy from slowing more sharply.
- In the US, federal spending has increased for five straight months after being flat for five years, rising 5.5% year-over-year in October.
- France and Italy have been given more time by the European Commission to meet their deficit reduction targets, which means they won’t need to implement substantial spending cuts (tax cuts in France and Italy are more likely this year).
- Germany should ramp up spending after initially proposing to balance its budget in 2015, while…
- Europe will likely approve and begin to implement some version of President Juncker’s plan to provide more than €300 billion in spending initiatives.