The annual U.S. budget shortfall tripled to a record $3.1 trillion, or 16.1 percent of Gross Domestic Product, in the fiscal year ended 30 September, according to the U.S. Treasury department.
The new debt resulted from efforts to fight the pandemic and recover from the ensuing economic shutdown that continues across large swaths of the country.
At year-end, the total federal debt reached 102 percent of GDP, the highest since 1945, when the U.S. was financing World War II, according to the private, nonprofit Committee for a Responsible Federal Budget.
To fill this year’s budget hole, the U.S. Treasury sold securities that ran the total federal debt held by the public to $21 trillion, 25 percent more than in the previous fiscal year.
Most analysts and economists have called for more stimulus spending, but Republicans in Congress have balked, citing the ballooning debt.
The federal deficit was set to pass $1 trillion this year even before the shutdown, following 2017’s Republican-led tax cut and two Congressional budget agreements that raised spending.
Then stimulus spending and economic rescue programs nearly doubled federal outlays from April through September, compared to a year earlier.
At the same time, revenue dropped 7.1 percent, including a 7-percent decline in income and payroll taxes and a 15-percent plunge in corporate payments, due in part to federal initiatives to reduce taxes on businesses facing losses.
TREND FORECAST: Regardless of who wins the Presidential Reality Show®, more government stimulus will be pumped into the economy to artificially prop it up. Thus, the debt levels will increase, dollar value will fall, and precious metal prices will rise.
Should Joe Biden win the race to the White House and the Democrats gain control of Congress, however, greater levels of stimulus will be generated, thus pushing the deficit higher, the dollar much lower, and precious metals much higher as well.
