USA BUDGET DEFICIT INCREASED 101 TIMES IN A YEAR

Posted 24 July, 2020

Last month, the USA spent a record $ 1.105 trillion - $ 763 billion more than last June, the Congressional Budget Office said. At the same time, due to the decline in economic activity in the country, budget revenues fell by 28% ($ 92 billion) compared to June last year - this is the strongest drop since the financial crisis of 2008-2009.

 

As a result, the USA budget deficit increased 101 times over the year - from $ 8 billion in June last year to $ 863 billion.Its growth over the last month turned out to be more than for the entire 2018, and only $ 121 billion less than last year ($ 984 billion).

 

The reason for the record growth in the budget deficit was "the reaction of the presidential administration and the federal government to the economic disruption caused by the 2020 coronavirus pandemic," explained in a report from the Budget Office. So, almost half of all government spending in June fell on the $ 660 billion small business protection program.Last week, US President Donald Trump signed a bill to extend this program until August 8, since in a number of states businesses were again quarantined due to the second wave of COVID -nineteen. Almost 60 times compared to June last year (from $ 2 billion to $ 116 billion) increased budget spending on unemployment benefits (including an additional weekly benefits of $ 600).

 

The United States has to finance an unprecedented state budget deficit due to the record national debt, the size of which yesterday broke through the $ 26.5 billion mark. Now, every US citizen has $ 80,312 in debt. For each American taxpayer - $ 213,102.

 

America's rapid buildup of public debt is causing investor confidence in the traditional defensive asset - US government bonds - to rapidly decline. According to the US Treasury, in April (more recent data is not yet available) China reduced its investments in US government bonds by $ 8.8 billion. Japan, which now ranks 1st in terms of investments in US debt securities, sold them by $ 5.7 bln. Great Britain, the last three countries with the largest investments in the US public debt, reduced its Treasury portfolio by $ 26.8 bln.

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