Question

“What is the Government’s Fiscal Stance?” and “how does this impact commercial real estate?”.

Some questions to consider are as follows: What’s the percentage of federal, state and local government spending for goods and services as a part of GDP?  Has this changed over time?  Any forecasts to predict a percentage change in the future?  Does the government spending number found in the GDP report capture all government spending?  What about transfer payments such as Medicare?  Deficit issues would come into play here, as well.

Answer 1

  Fiscal stance

The fiscal stance measures the effect of government policy on the budget balance. The cyclically. adjusted primary balance is the main metric used to measure this effect.Fiscal policy is the means by which a government   adjusts its spending levels and tax rates to monitor and influence a nation's economy. It is the sister strategy to monetary policy through which a central bank influences a nation's money supply.

  The real estate sector is facing various issues and the government needs to introduce a comprehensive package of fiscal and non-fiscal reforms to improve its condition. Issues like liquidity crunch, double taxation, high taxation rates, etc. are some of the reasons suffocating the industry as a whole.Liquidity risk is increasing for Indian-based real-estate developers as banking and non-banking institutions are shying away from lending to the sector. The real estate sector, which is reeling under the problem of a liquidity crisis, was hopeful that the new government would help the sector with better reforms. Easy loans would have helped in the rehabilitation of the whole industry, but no concrete step has been taken yet.

Consumption by consumers, investment by businesses, and government spending are the three major parts of our economy and of most economies.The size of a nation's economy is the total value of the spending on goods and services in the nation in a year. This spending occurs in the form of transactions within and between these three sectors.

  GDP = C + I + G + (Ex - Im)

Government expenditure accounts for about 20% of the GDP of the United States, including spending by federal, state, and local government.

. In recent decades, the level of federal government spending and taxes, expressed as a share of GDP, has not changed much, it fluctuates between about 18% to 22% of GDP.So the level of state spending and taxes, as a share of GDP, has risen from about 12–13% to about 20% of GDP over the last four decades

  A significant portion of government budgets are transfer payments, like unemployment benefits, veteran's benefits, and Social Security payments to retirees. These payments are excluded from GDP because the government does not receive a new good or service in return or exchange

Medicare is also excluded from government spending

When the outlay of a government  exceeds its tax revenues, the government budget is said to be in deficit; government spending in excess of tax receipts is known as deficit .So deficit issues would come into play here, as well.