The United States started accumulating approximately $1 trillion in debt every three months since June of last year, as highlighted by Bank of America investment strategist Michael Hartnett in a recent investment note.
The national debt stands at a staggering $34.48 trillion and continues to rise at an alarming rate. On January 4th, it reached an unprecedented milestone by surpassing the $34 trillion mark, marking an unprecedented moment in U.S. history.
On June 15, 2023, the debt first reached $32 trillion. It then reached $33 trillion on September 15, 2023.
According to the Treasury Department, the national debt refers to the money that the federal government has borrowed to cover its accumulated expenses over time. In simple terms, it can be likened to a person using a credit card for purchases without paying off the full balance each month. The deficit arises when the cost of purchases exceeds the amount paid off, and the overall debt builds up over time.
As of the current fiscal year, the national deficit stands at a staggering $531.86 billion.
According to the federal agency responsible for U.S. fiduciary obligations, our national deficit has increased by $72 billion compared to the previous year’s deficit of $460 billion during the period of October 2022 to January 2023.
According to CNBC, the national debt is projected to hit $35 trillion this month, continuing a 100-day pattern, as forecasted by Hartnett.
In November of last year, Moody’s Investors Service downgraded the credit ratings of the U.S. federal government from “stable” to “negative” due to concerns about the national debt and increasing budget deficit. The agency stated that without effective fiscal policy measures to reduce government spending or increase revenues, the US’ fiscal deficits would continue to be substantial, leading to a significant deterioration in debt affordability, especially in the context of higher interest rates.
Last year, Fitch downgraded the U.S. government’s credit rating from AAA to AA+, citing concerns about fiscal deterioration over the next three years.
Deputy Secretary of the Treasury Wally Adeyemo expressed his disagreement, stating, “The American economy retains its strength, and Treasury securities continue to be recognized as the foremost safe and easily converted asset worldwide.”
By early 2024, economists and CEOs were already sounding the alarm about an impending recession. They pointed to the detrimental effects of high interest rates, which were “killing companies.” To make matters worse, there were widespread layoffs, and the jobs report revealed a significant increase in the number of people working part-time jobs, often multiple ones, just to make ends meet.
According to The Center Square, there are concerning economic indicators that have emerged in recent years. Firstly, the cost of food stamps for family meals has seen a significant increase of 31% over the past three years. Additionally, car insurance rates have also surged, with a nationwide increase of 26%. Some states even reported staggering increases of 44% in just one year. In light of these challenging economic conditions, one CEO suggested a rather unconventional approach – recommending that Americans resort to having cereal for dinner.
Federal Reserve Chairman Jerome Powell has a busy week ahead as he is set to testify before the House Financial Services and Senate Banking committees. During these hearings, Powell will address the current financial concerns and provide insights into the Fed’s outlook and potential solutions. Additionally, there is growing anticipation that the Fed will announce an interest rate cut later this month, a move that some analysts have already predicted.