The Debt Pyramid: US Budget Deficit Increases 40%
NEW YORK – September 17, 2018
The US budget deficit rose to a record level, and next year will likely reach $1 trillion.
In August, the US collected only $219 billion in tax revenues - 3.2% less than last year, while expenses reached $433.3 billion.
This is not only a third more than in the same period last year, but also a record for monthly government spending. As a result, the budget deficit in August was $214 billion - an absolute record for August and one of the highest in history. In comparison, last year the figure was only $ 108 billion.
The total budget deficit since the beginning of the fiscal year was 40% higher than last year and reached $898 billion.
According to the forecasts of the US Budget office, against the backdrop of tax incentives, the budget deficit will grow further and reach the level of a trillion dollars next year.
Earlier it was expected that the trillion dollar level would be reached only in 2020. We remind you that for the first time in its’ history, the United States has carried out a fiscal stimulus and increased rates at the same time. This has lead to an increase in debt service payments: in the second quarter they reached a record $538 billion.
Considering the fact that the US is pursuing an unfriendly trade policy in parallel, in other words, fueling "trade wars" and imposing sanctions all over the globe, many countries are gradually abandoning investment and trade in the dollar. In particular, Russia has almost completely sold this year's treasuries from its’ reserves and Turkey has likewise significantly reduced its investments in the US Treasury. Bills. Japan has been reducing its investments in US state debt for quite some time now.
In General, it is likely that the sale of treasuries will lead to an even greater jump in yields and a fairly strong decline in the dollar, however, it will not be a disaster for the US. On the contrary, many countries would now like to see a weakening of the dollar, which will likely relieve tension from world markets.