The U.S. budget deficit is slowly getting back under control. After last year’s $2.7T in government spending, (and $3.1T the year before) this year’s budget deficit should shrink dramatically, to ‘just’ $1.036 trillion. In close comparison to Trump’s final year in office with a federal deficit of $0.98T.
Since 2001, the government has put more money into the economy, and issued more IOUs (Treasury bills and bonds) than it took in, year by year. The Great Recession years were (most of us thought at the time) unprecedented, with deficits over $1 trillion. But then came COVID, and the deficits exploded to the truly unprecedented highs mentioned.
Going forward there are several complicating elements. One being inflation, driving up interest rates, which drives up the rates that the government will have to pay on newly-issued bonds. US debt service costs have been historically low since the early 2000s and to keep it that way, the U.S. won’t be able to raise rates to levels experienced in the 20th century.
There is no shortage of things to worry about, in the world, in our personal lives, pretty much everywhere. Taking on the worry of a budget deficit that is finally coming back down to earth should probably not be at or near the top of our list. Chalk one up on the small win column,
*The recent stock market volatility and the US Consumer was the topic of discussion in Sam Huszczo’s interview with the Detroit Free Press in the top link below: