There was more optimism about a trade deal this week. There was also more pessimism about a trade deal this week. Markets reacted accordingly. But there was some other interesting news out there. Jerome Powell lectured Congress about the national debt and last month’s inflation data came in hotter than expected. Host Mike Maharrey covers these stories and more, and basically ignores the trade war gossip, on this episode of the SchiffGold Friday Gold Wrap podcast.
Uncle Sam is spending money far faster than he’s taking in. The US federal government ran the biggest budget deficit in seven years in fiscal 2019, according to the Treasury Department. And the spending is even worse than advertised.
The $984 billion deficit amounts to 4.7 percent of GDP. That’s the highest percentage since 2012. It was the fourth consecutive year in which the deficit increased as a percentage of GDP. The debt-to-GDP ratio is estimated to have increased a hefty 26 percent over last year.
When is a $984 billion budget deficit good news?
When you thought you might get a $1 trillion budget deficit.
The Treasury Department released the fiscal year 2019 budget numbers on Friday. The budget shortfall came in at $984 billion right on the CBO estimate. A CNBC report said this would likely, “come as a relief to the Trump administration, which had previously forecast that the deficit would hit $1 trillion during the 2019 fiscal year.”
The US national debt increased by a staggering $814 billion between Aug. 1 and Oct. 6, according to Treasury Department data.
That represents a 4% increase in the debt — in just a little over two months.
News of a possible “phase 1 trade deal” and movement toward a resolution of the Brexit fiasco have buoyed stocks and put a lid on silver and gold this week. But positive vibes on these two fronts overshadowed a lot of economic data that came out this week that was less than ideal. It seems the American consumer might be getting close to being maxed out. In this episode of the SchiffGold Friday Gold Wrap podcast, host Mike Maharrey digs into a big pile of debt and more.
The national debt continues to spiral upward. It increased by another $1.2 trillion in fiscal year 2019. But Paul Krugman says it’s not that big of a deal. He downplayed the national debt in a tweet, claiming emphatically that “DEBT IS MONEY WE OWE TO OURSELVES.”
This encapsulates a common Keynesian argument. Debt can’t really burden future generations. In the aggregate, Americans won’t be any worse off. Paying the national debt merely shifts dollars from one American to another. While future taxpayers will be out some money, the American bondholders who receive the interest payments will end up with more money. When all is said and done, it’s a wash.
The budget deficit for fiscal year 2019 came in just a hair under $1 trillion according to the Congressional Budget Office estimate.
Even if it does come in under the trillion-dollar mark, it would still rank as biggest deficit since 2012. The budget shortfall has only eclipsed $1 trillion four times, all during the aftermath of the 2008 financial crisis.
It was a bumpy ride in the markets this week. Right now, volatility is the name of the game – in both stocks and precious metals. People are getting nervous out there with some pretty grim economic data this week stirring up recession fears. Meanwhile, the US government just keeps spending money it doesn’t have. Host Mike Maharrey talks about all of this and more in this week’s episode of the Friday Gold Wrap podcast.
The US national debt increased by $1.2 trillion in fiscal 2019, which ended Sept. 30. This follows on the heels of a $1.27 trillion increase in the national debt in fiscal 2018.
The fiscal year budget deficit surged passed $1 trillion last month. Spending deficits necessarily mean more government borrowing and we’re seeing that in the numbers as well. Uncle Sam’s outstanding public debt grew by $450 billion in August alone.
The national debt stood at $22.02 trillion on Aug. 1 and surged to $22.47 trillion as of Aug. 27.