US budget deficit reaches highest-ever level amid pandemic

14 Sep 20

The US has reached a record budget deficit of $3trn this year as the government fights the health and economic crises caused by Covid-19.

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The White House

The White House, Washington DC, USA

 

Federal government spending in the first 11 months of the US financial year, which began last October, was more than $6trn – far exceeding the roughly $3trn taken in taxes.

The deficit is more than double the previous record, set in 2009 as the government reeled from the global financial crisis.

April and June 2020 saw the largest single-month deficits, owing to the government’s $2trn pandemic stimulus programmes.

The Congressional Budget Office earlier this month projected the federal budget deficit would reach $3.3trn by the end of the year.

At 16% of GDP, this would be the largest in relative terms since the end of the Second World War.

The CBO also said federal debt could reach 98% of GDP this year, far more than 79% recorded last year and a mammoth increase from 2007’s figure of 35%, before the global financial crisis.

It also projected debt will exceed 100% of GDP in 2021, and reach 107%, the highest in US history (it reached 106% in 1946), by 2023.

As the main two political parties continue to argue over how much more to spend to stimulate the economy, the jobs crisis caused by the pandemic continues.

Last week the Department of Labor said nearly 30 million people claimed benefits in the last full week in August, when the comparable week in 2019 saw 1.6 million people do the same.

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