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Why Congress’ Budget Deal Could Give the Economy a Boost

Obama signs bipartisan budget bill 2015 into lawObama signs bipartisan budget bill 2015 into law
U.S. President Barack Obama signs the bipartisan budget bill 2015 into law in the Oval Office of the White House on Nov. 2, 2015.Photograph by Getty Images

Congress and President Obama recently agreed a budget deal that largely avoids a government shutdown and increases government spending by $80 billion over two years.

It will also achieve another perk, according to Goldman Sachs (GS): Giving the American economy a short-term shot in the arm.

The increased government spending will push U.S. economy in a positive direction for the first time since 2010, according to Bloomberg. According to Goldman Sachs Economist Alec Phillips:

“We expect that the deal will shift the overall stance of fiscal policy from neutral in 2015 to a slight boost of 0.3 percent of GDP in 2016. At the federal level, we expect the impulse to go from slightly negative to slightly positive. Along with the ongoing small positive contribution from the state and local sector, this should result in a modestly expansionary overall fiscal impulse in 2016.”