US spends 44% of GDP annually, comparable to World War 2, indicating fiscal deterioration and unsustainable government spending, surpassing 2008 levels.

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US Government To Borrow $1Trillion in Q3 As Deficit Widens and Debt Servicing Costs

The US government is set to borrow $1.007 trillion in Q3, a considerable rise from the previous estimate of $733 billion, due to increasing fiscal deficit and dwindling cash reserves. The federal deficit has surged by 170% to $1.39 trillion in the nine months through June. Spending outstripped income, with $4.80 trillion spent against $3.413 trillion in generated revenues. The US pays 2.76% interest on its debt, the highest in over 11 years. Despite these, Fitch retains the US’s AAA rating, but places it on negative watch due to fiscal and debt trajectories.

US Government Shutdown Threat Builds

A looming fiscal standoff in Washington could disrupt the Federal Reserve’s upcoming policy decisions and further dent America’s global economic reputation. Fitch Ratings recently downgraded the US debt’s AAA status, intensifying political tensions over spending. With Congress not addressing these issues, the risk of a government shutdown after September 30 rises. This situation could affect the Fed’s September interest-rate decision and impact consumer spending and GDP growth.

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