Headwind: Hard Landing with Fiscal Dominance
- Public debt rollover needs exceed $10T annually, dominating funding conditions over business cycle
- Deficits average 7-8% of GDP despite recession, driven by political spending imperatives
- Inflation stays 3-4% under fiscal dominance, muting monetary policy effectiveness
- Unemployment peaks at 6.5% with delayed hysteresis reducing potential growth to 1%
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