Uh-oh. US Debt Might not Decline as Fast as Once Thought.

[jjm]

Goldman Sachs (Dudley) argues that the economic news indicates that the overall economy may now be contracting (labor market continues to deteriorate, investment bust is gathering momentum). It also points out that Fed officials have noted that the economy is giving few signs of hitting bottom, with the result that growth, not recession, remains the focus. Goldman also revised down (to $180-$220 billion) its estimate of federal budget surpluses in the fiscal periods 2002-2006. The adjustment is a function of the front-loaded tax cut and softer economic activity. This implies slower government debt paydown.

 

[Locutus of Board]

The man who is long on debt is usually short in money.