US National Debt goes overboard

By: Miguel A. Rodriguez

09:45, 14 September 2020

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The state of the American economy reached WW II levels.

As the pandemic’s effects became more and more visible on each country’s economy, the governments started to take measures to tackle those. But as time goes by and more money is being injected in the economies, effects began to show. Now, the US happens to find itself in a situation like this.

The latest data from the Committee for a Responsible Federal Budget shows that the federal debt could go as high as $4 trillion this year. It is one side effect of the $2 trillion CARES Act approved in March made to pay for unemployment benefits and the bailout of businesses. The government also spent roughly $3.5 trillion on aids for states, cities, and hospitals.

Moreover, according to the Treasury Department, the deficit increased by another $1.88 trillion in eight months – double that for the entire 2019. 

Also, the stock market lost some value - $110.8 trillion, but it managed to recover some of the March losses. The household debt rose 3.9% due to a 3.2% mortgage increase, while the consumer debt rose 1.6%. 

The Republicans tried to address the situation by rejecting a new stimulus package worth $3 trillion that could have been added to the already massive debt. The Republican Senate Leader, Mitch McConnell, stated in May that "We now have a debt the size of our economy. That hasn't happened since World War II."

Things might change, as President Trump marches on the idea of another stimulus package meant to help the infrastructure. People familiar with the matter think that the stimulus could vary between 1 to $2 trillion. The money would be used to maintain, repair, and build roads, bridges, and 5G wireless infrastructure and rural broadband. But the administration's plan is fighting the House Democrats' one: a $500 billion proposal to renew the infrastructure for the next five years.

More about the matter will be discussed at a White House meeting on Thursday. 

During today’s pre-market trading, USA500 gained more than 0.80%, while USA30 added 0.62%.

Sources: forbes.com, forexlive.com, pgpf.org.com, businessinsider.com, Bloomberg.com


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This information/research prepared by Miguel A. Rodriguez does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.The research provided does not constitute the views of KW Investments Ltd nor is it an invitation to invest with KW Investments Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.The research analyst in not employed by KW Investments Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation, or particular financial needs before making a commitment to invest. The laws of the Republic of Seychelles shall govern any claim relating to or arising from the contents of the information/ research provided.