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Global budgets are loosening up amid fiscal sunshine

Americans are enjoying year-on-year wage gains above 3% for the first time in over a decade according to two economic reports this week, including a monthly jobs report that came in comfortably above expectations.

Data: Federal Reserve Bank of St. Louis; Chart: Chris Canipe/Axios

September was the 97th consecutive month that the economy has created jobs. That's an all-time record. Fiscal policy is goosing the economy. The Treasury is going to have to borrow $1.34 trillion this year, more than double the number in 2017. Enjoy the good times while they last.

  • The Fed's economists expect an economic deceleration ahead. They're projecting 2.5% growth in 2019, 2% in 2020 and just 1.8% in 2021.

The big picture: This isn't purely an American story. Budgets are getting looser around the world.

This year's U.K. budget marked the official end of austerity. Finance Minister Philip Hammond is "basking in the largest sustained windfall from improved public finance forecasts since the Office for Budget Responsibility was created in 2010," per the Financial Times.

  • Hammond did warn that austerity could return in the event of a no-deal Brexit. It's not clear whether the Euroskeptic wing of his party believes him.

Italy's government intends to run a budget deficit of 2.4% of GDP next year, which is unacceptable to the EU.

  • Italy's sovereign bonds are now just one notch above junk-bond status, per Moody's.

The other side: The euro-area economy grew at the slowest pace in four years during the most recent quarter. And in the U.S., inflation has been running at more than 2% per year, which makes 3% wage gains rather unimpressive.

Go deeper: Wages rise, but so does inflation

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