WASHINGTON (AP) – The budget agreement that congressional leaders and President Donald Trump forged late Monday lifted a big potential drag on the U.S. economy for this year and next.
Under the agreement, the economy was spared from a series of deep spending cuts that were set to take effect under a far-reaching budget law enacted in 2011. Monday’s agreement nullified those cuts and increased spending by $320 billion over two years.
Still, that additional spending isn’t expected to deliver a significant boost to the economy. That’s because the $320 billion figure is somewhat misleading. It’s an increase compared with the deep cuts that would have been required under the 2011 law. But it’s only a small gain compared with the current level of spending.
“It’s not so much that it’s a big boost, but it’s a pain that was avoided,” said Michael Pugliese, an economist at Wells Fargo Securities.
Like most economists, Pugliese hasn’t revised his economic forecasts based on Monday’s deal. He still expects economic growth to slip to 2.6% this year, a solid pace, from 2.9% in 2018.