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The sea of red ink is a product of the government’s massive spending to reduce the effects of a coronovirus-fuel recession that has cost millions of jobs.
The loss from October through August is more than double the previous 11-month record of $ 1.37 billion set in 2009. At that time the government was spending large sums of money to get out of the Great Recession created by the 2008 financial crisis.
With one month to go in the 2020 budget year, which ends on September 30, the deficit could be even greater. The Congressional Budget Office is projecting a deficit this year and will be a record $ 3.3 trillion. However, the government often runs a surplus in September, so it is possible that the final figure for this year could fall under $ 3 trillion.
“Although we expect policymakers to produce another fiscal relief package, it will not have an impact on this year’s deficit,” said Nancy Wanden Houghton of Oxford Economics in a research note.
This is still better than last year’s $ 984 billion imbalance. The previous record loss for the fiscal year in 2009 was $ 1.4 trillion after the financial crisis.
Boost in unemployment benefits
Congress has passed a series of nearly $ 3 trillion relief bill that provides such support $ 600-a-week boost In unemployment benefits, up to $ 1,200 in payments to individuals, and assistance to small businesses trying to retain their workers.
However, many aid programs ended in early August and efforts were made to approve another measure to restore the finished programs Congress has failed so far. This has caused concern among economists that so many people are still out of work and so many businesses are struggling to reopen, economic reforms may return by the end of this year.
After a sharp decline in May and June, the number of Americans filing for weekly unemployment benefits has remained more and more stable 800,000 in recent weeks.
“There is still a long way to go to recover labor, which historically remains high,” Bank of America economists told investors in a new report. He also said that Congress is unlikely to undergo another round of fiscal stimulus before the election, “creating a momentum bump for recovery.”
Debt may exceed GDP in 2021
The CBO estimates that by the end of this year, the amount of government debt will be equal to 98% of the total economy and then next year it will exceed 100% of GDP, with the total output of the economy being goods and services. It has not seen a level since the creation of huge government debt in the 1940s to pay for fighting World War II.
By comparison, debt held by the public was 79% of GDP at the end of 2019 and 35% of GDP in 2007 before the Great Recession.
Despite adding a large amount of debt, the cost of interest to the cost of government debt is actually down 10% to $ 484 billion this year, compared to what the government spent on interest payments last year. Treasury officials said that this year is a low figure due to low interest rates as the country went into recession.
Through August of this year, tax revenue totaled $ 3.05 trillion, down 1.3% from the same period last year. Spending totaling approximately $ 6 trillion from $ 4.16 trillion for the same period last year.
Video: Talk of Lobo Fell closing after six years due to coronovirus epidemic (CBS Baltimore)
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