The United States has been accumulating debt at a staggering pace, with approximately $1 trillion added every three months since June of the previous year, as noted by Bank of America investment strategist Michael Hartnett.
As of now, the national debt stands at $34.48 trillion and continues to rise. It surpassed the $34 trillion mark for the first time in U.S. history on January 4th. Three months earlier, on September 15, 2023, the debt had reached $33 trillion, and three months before that, on June 15, 2023, it had reached $32 trillion.
The Treasury Department defines the national debt as the total amount of money borrowed by the federal government to cover accumulated expenses over time. It is analogous to an individual using a credit card for purchases without paying off the full balance each month. The deficit arises from purchases exceeding the amount paid off, while accumulated deficits over time represent the individual’s overall debt.
Currently, the national deficit for the fiscal year stands at $531.86 billion. Compared to the national deficit of $460 billion for the same period the previous year (October 2022 – January 2023), the deficit has increased by $72 billion, according to the federal agency responsible for U.S. fiduciary responsibility.
Michael Hartnett’s prediction suggests that the pattern of adding $1 trillion to the national debt every 100 days will persist, with the debt reaching $35 trillion by this month, as reported by CNBC.
Last November, Moody’s Investors Service downgraded the U.S. federal government’s credit ratings from “stable” to “negative,” citing concerns about the national debt and growing budget deficit. Moody’s highlighted the risk of large fiscal deficits persisting amid higher interest rates without effective fiscal policy measures to address government spending or revenue generation.
Fitch Ratings also downgraded the U.S. government’s credit rating from AAA to AA+, citing anticipated fiscal deterioration over the following three years.
Despite these downgrades, Deputy Secretary of the Treasury Wally Adeyemo emphasized the strength of the American economy and the status of Treasury securities as globally recognized safe and liquid assets.
However, by the beginning of 2024, economists and CEOs began warning of an impending recession due to factors such as high interest rates adversely affecting businesses, widespread layoffs, and an increase in part-time employment among individuals struggling to make ends meet.
These economic concerns coincide with reports of significant cost increases for essentials such as food and car insurance. To cope with financial challenges, some have suggested unconventional measures like eating cereal for dinner.
Federal Reserve Chairman Jerome Powell is scheduled to testify before the House Financial Services and Senate Banking committees this week to address ongoing financial concerns and outline the Fed’s outlook and proposed solutions. There are expectations in some quarters that the Fed may cut interest rates this month to address economic challenges.