US budget deficit to rise by 2024
With less than three weeks before the presidential election, the Treasury Department announced on Friday that the United States budget deficit in 2024 will be 6.4% of gross domestic product (GDP), up from 6.2% in 2023.
At the end of fiscal year 2024, which ends on September 30, the deficit thus amounts to $1,833 billion, an increase of 8% compared to the previous year. This is the third highest amount in the history of the United States, after the peaks of 2020 and 2021 linked to the Covid crisis. The accounts of the largest economy in the world were then burdened by the explosion of public spending.
By 2022, however, the deficit had been greatly reduced. But it began to rise again in 2023 and then in 2024, under the effect of the high interests that must be paid in the face of the staggering US debt.
In detail, from October 2023 to September 2024, revenue increased by 11%, to $4,919 million. Taxes paid by American households were indeed higher than the previous year as their financial situation improved due to rising employment and wages, a Treasury official told reporters.
But spending increased 10%, up to 6,752 million. This is due in particular to debt service rising by almost a third, while interest rates were at their highest level since the early 2000s.
However, the US central bank began cutting rates in September and is expected to continue doing so in the coming months, encouraged by slowing inflation.
“The Biden-Harris administration remains focused on the long-term growth of our economy, with historic investments in infrastructure, manufacturing and clean energy, while considering our long-term financial prospects”commented Treasury Secretary Janet Yellen, quoted in the press release.
The country’s fiscal situation is a major issue in the Nov. 5 election, with both sides accusing each other of having policies that would further increase the debt. A Biden administration official deplored that congressional Republicans were “responsible for tax cuts that led to lower income levels and increased debt”and that they “We continue to call for massive tax cuts”.
