Can Policy Makers Actually Get What They Want?

Bridgewater

Jason Rogers, Greg Jensen

Article

1 Pages

Bridgewater Associates examines whether coordinated monetary and fiscal policy can stabilize markets without fully repairing the underlying economy. With an estimated $26 trillion global corporate revenue shortfall in 2020, policy support may increasingly separate asset prices from fundamentals, potentially raising longer term inflation risks.

Key Takeaways

Historic Policy Response: The US was on track to run its largest budget deficit since World War II as fiscal stimulus and QE expanded dramatically.
Markets Outpace Economy: US equities recovered above year earlier levels even as Bridgewater expected economic activity to remain below pre virus levels one year later.
Debt Burden Expands: US debt and promised obligations were projected to reach roughly 11x GDP over the next decade even before the pandemic increased fiscal pressures.
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