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Federal deficit spending is headed toward "uncharted territory," the firm said on Sunday, suggesting that the Trump administration and Congressional Republicans may not be able to count on the economic boost of tax reform for very longer.

In the wake of an ambitious infrastructure plan and a budget that drew fire from virtually all sides, Goldman Sachs said in a note to clients that the federal deficit would reach 5.2 percent of U.S. growth by 2019, and would "continue climbing gradually from there."

Yet Goldman Sachs warned that the economic impetus from tax reform may have diminishing returns after this year. "The fiscal expansion should boost growth by around 0.7pp in 2018 and 0.6pp in 2019, but will likely come to an end after that"—listing a litany of reasons why spending and debt would conspire to undermine the world's largest economy.


Reference: CNBC

Read more: https://www.cnbc.com/2018/02/19/goldman-sachs-warns-us-spending-could-push-up-rates-and-debt-levels.html