USA: public spending out of control in August, interest on debt exceeded 1000 billion euros
2024 was the year in which the US budget deficit was supposed to gradually normalize and, after two years of crisis, the US was supposed to end its out-of-control spending habits. For a while it seemed that actually the US federal government had embarked on a path of moderation, forgetting the crazy 2021 and 2022, when the deficit reached an incredible 18% of GDP…
From Zerohedge: US deficit and unemployment
…before slowing slowly for a few months, then surging past 2023 again in August, with spending spiraling out of control .
.. but then things changed in August: an August budget deficit of as much as $380 billion, an increase of more than 50% compared to July's $243 billion, an increase of more than 55% compared in July and a 66% increase over last August …oh, and nearly $100 billion more than the median estimate of $292.5 billion, which may be why Treasury leaked the number silently after 5am, when everyone was sleeping, and not at the usual time of 2pm.
So, while everyone in the US was asleep, someone quietly announced that government spending in the US is out of control, reaching an incredible $686 billion, the highest since March 2023, and in just a handful of months. of crisis during the market crash there was higher government spending in a given month.
For those wondering how government revenues have fared in this period of spending explosion, here is the answer:
…which is notable because, while spending is exploding, revenue has also managed to rebound, largely thanks to capital gains taxes from the soaring stock market. Too bad that the expense is much higher than the proceeds.
With interest rates at a 40-year high and the Federal Reserve delaying declines, interest rates have soared into orbit like a SpaceX rocket.
The interesting thing is that the trillion level of interest has been exceeded and there are still months left until the end of the year. Getting to 1200 billion in interest?
The bottom line is that, to date, gross interest on US debt has exceeded not only defense spending, but also income security, healthcare, veterans' benefits and Medicare, and is now the second largest expense. larger than the US government, second only to Social Security, which is about $1.5 trillion on an annual basis.
At this point either the Federal Reserve takes immediate measures, "Japanese" style, i.e. reducing interest and dealing less with inflation, which in the USA is not at European levels, or we are at the end of the games and the federal state will have to start cut the budget to pay interest, a bit like… Nigeria does.
Happy presidential elections.
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The article USA: public spending out of control in August, interest on debt exceeds 1000 billion euros comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/usa-ad-agosto-spesa-pubblica-fuori-controllo-gli-interssi-sul-debito-superano-i-1000-miliardi-di-euro/ on Fri, 13 Sep 2024 08:00:17 +0000.