Budget Blues Fade as U.S. Fiscal Drag Ends After Election

Tax-and-spend is turning into a tailwind for the economy in the wake of last week’s elections.

The combined budgets of cities, states and the federal government will add 0.4 percentage point to annual growth in the fourth quarter of this year, after reducing it by 0.9 point in the year-ago period, according to St. Louis-based Macroeconomic Advisers. While the swing was in train before Nov. 4, it will be accentuated by the ballot results, as municipalities spend the proceeds of newly approved bond issues and congressional Republicans eye increased outlays on defense.