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Big cuts in the federal deficit will almost certainly lead to a large reduction in corporate profits
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Stock-market investors hoping that the so-called Department of Government Efficiency, or ”DOGE,” will dramatically reduce the U.S. budget deficit should be careful what they wish for.
That’s because there is a close correlation between the budget deficit’s share of U.S. GDP and corporations’ profit margins. A big reduction in the government deficit will almost certainly lead to a correspondingly large reduction in the corporate profit margin.
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Mark Hulbert is a columnist for MarketWatch. His Hulbert Ratings service tracks investment newsletters that pay a flat fee to be audited.
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