Yvo S.’s Post

Interest Payments on the National Debt Top $1 Trillion as Deficit Swells... With the Federal Reserve holding benchmark rates at their highest in 23 years, the government has laid out $1.049 trillion on debt service, up 30% from the same period a year ago. The jump in debt service costs came as the U.S. budget deficit surged in August, edging closer to $2 trillion for the full year. #Economy #NationalDebt #FederalReserve #inflation #housingmarket #MortgageReports #renovationloans https://lnkd.in/gjJRaYSd

The U.S. government has surpassed $1 trillion in interest payments on its $35.3 trillion national debt for the first time, according to the Treasury Department. So far, $1.049 trillion has been spent on debt service, up 30% from last year, and projected to reach $1.158 trillion by year’s end. Net interest payments, at $843 billion, now exceed all federal spending except Social Security and Medicare. With a budget deficit approaching $2 trillion, the fiscal outlook has worsened. The Fed is expected to cut rates next week, contributing to a drop in Treasury yields.

U.S. government debt hit $35 trillion at the end of July, the latest milestone since quarterly interest payments reached $1 trillion earlier this year. As Head of Fixed Income Christopher Gunster, CFA, discusses in his latest Forbes.com article, “an increasing amount of debt could lead to higher interest rates and higher inflation, if not addressed.” From a surging federal debt-to-GDP ratio and rising interest payments, to declining foreign demand for U.S. debt, Chris breaks down why this historic figure has investors watching long-term rates. Read the article for a full analysis:

The Congressional Budget Office estimates that the total amount of gross federal debt will reach $52 trillion by 2033, a 48.5% increase from today’s level. The continued growth in the budget deficit and subsequent increase in the amount of federal debt has major implications for investors, if the recent volatility hasn’t added enough fuel to the fire. Read my latest Forbes.com column below for the full picture.

Interest payments on the national debt top $1 trillion as deficit swells - With the Federal Reserve holding benchmark rates at their highest in 23 years, the government has laid out $1.049 trillion on debt service, up 30% from the same period a year ago. - The jump in debt service costs came as the U.S. budget deficit surged in August, edging closer to $2 trillion for the full year. https://lnkd.in/guCcAPrY

My next project is on Global Debt and these are my Key Observations based on my dashboard: Debt Trends by Sector Over Time: 1950-1970: Central Government had the highest debt, while Financial Institutions and Households reported significantly lower debt. 1971-1990: A similar trend continued with rising Central Government debt, followed closely by Private Sector debt. 1991-2010: Both Central Government and Financial Institutions showed sustained high debt levels, while Households saw moderate debt. 2011-2022: Debt levels across all sectors (Central Government, Financial, Private, and Households) remained high, indicating global financial stress. Comparative Debt Analysis (Bar Chart on the Right): Central Government Debt: Substantial increases observed over the periods 1952-1970, 1971-1990, and 2011-2022. Non-Financial Sector: Moderate to high growth. Private Sector: Consistent contributions, though smaller compared to the Central Government. In Conclusion, Central Government debt remains the dominant contributor globally across all timeframes. Recent decades (2011-2022) have shown consistent debt growth across all sectors, emphasizing increasing financial strain.

This level of deficit and debt is just not sustainable. The model is supposed to be to borrow in hard times and then bring the debt down as a percept of GDP in good times. During the mid and late 1990s we actually eliminated the deficit, and even paid down debt (suggesting arguments that that never happens are not factually correct). A series of events, starting with 9/11 related economic uncertainty and security spending, the financial crisis at the end of that decade, then the pandemic are related recovery have all played their part in driving deficit and debt up. Low to negative interest rates, over the last two decades, have helped make this "habit" "affordable," at least in the short term. However, the day of reckoning has now arrived. Covering nearly $2 trillion dollars a year in deficits, in the strongest economy in a generation, is completely unsustainable, particularly as our population ages, and it leaves no room to maneuver in a crisis. Fixing this requires BOTH spending cuts and revenue increases. The sooner we get started the better! https://lnkd.in/g5XxsNuk

Recent outcry over public debt suggests the U.S. could be turning a bit more frugal, and, possibly, a bit more European. In the U.S., major voices in finance from Jamie Dimon to Jerome Powell have sounded the alarm on outsize levels of public debt. The U.S. government has gone debt crazy since the onset of the COVID-19 pandemic, with Trump’s $2.2 trillion COVID stimulus and President Joe Biden’s Inflation Reduction Act elevating national debt levels to record highs. At the latest count, the U.S. was sitting on a debt-to-GDP ratio of 121%. The eye-watering $33.1 trillion figure means every American is in equivalent debt to the tune of $100,000. Read more: https://lnkd.in/g54u-FDJ