Is Today’s Euphoria the Precursor of the Next Financial Crisis?

By Bill Longbrake via Barnett, Sivon & Natter

Is Today’s Euphoria the Precursor of the Next Financial Crisis?

"Optimism abounds across the globe and world economies are benefiting from years of easy monetary policy. Momentum is incredibly powerful and is currently self - reinforcing. Practically all economies are growing above potential and slack has already disappeared or is disappearing rapidly.

In the case of the U.S. , there is no slack in the labor market and the remaining slack in output is shrinking rapidly. E normous fiscal stimulus embedded in the “Tax Cuts and Jobs Act,” disaster relief spending, and substantial increases in defense and discretionary spending caps will lift growth substantially above potential in 2018 and probably in 2019 as well . When an economy has no slack , and operates well above its potential, it risks overheating and that triggers upward pressures on prices and accelerates the buildup of imbalances in the economy. We are in the mature phase of the business cycle and the added stimulus will propel the economy higher in coming months , perhaps dangerously so. "

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Is Today’s Euphoria the Precursor of the Next Financial Crisis?

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