Wednesday Jerome Powell issued the caution due to rising levels of federal debt. Federal debt is created when federal spending exceeds federal taxation. The Chairman of the Federal Reserve was addressing the Joint Economic Committee.
Too much of a good thing…
The Chairman noted the “high and rising federal debt,” now topping $23 trillion. He said this will make it difficult for the economy to recover from future market downturns.
Powell quote, “In a downturn, it would also be important for fiscal policy to support the economy. However, as noted in the Congressional Budget Office’s recent outlook, the federal budget is on an unsustainable path with high and rising debt… Over time, this outlook could reduce fiscal policy makers’ willingness or ability to support economic activity during a downturn. In addition, I remain concerned that the high and rising federal debt can in the longer term restrain private investment and thereby reduce productivity and overall growth…”
The U.S. Treasury Department released October deficit data. The data shows the federal government ran a monthly deficit of $134 billion. The federal government ran a nearly $1 trillion deficit last fiscal year. This information is from a Nov. 7 report released by the Congressional Budget Office (CBO).
The CBO report says, “In fiscal year 2019, which ended on September 30, the federal budget deficit totaled $984 billion—$205 billion more than the shortfall recorded in 2018…”
Presidential candidates fail to recognize the right answer when told
Discussion of the national debt has been largely absent from the 2020 presidential race. The amount owed continues to grow to the alarm of those tasked with dealing with the economy. Our politicians have declined to address the debt issue on the campaign trail. Worse yet, debate moderators have consistently ignored the topic too.
Isn’t the economic wellbeing would be a matter of concern to all Americans? What credibility does the Federal Reserve have? Is the information from the CBO reliable? What has Congress done to address the situation? Fed Chair warns America’s federal budget is on an ‘unsustainable path’ … for a reason.