Due to the pandemic, the United States of America is facing a great economic challenge. The country has seen the worst economic recession of all times and recovery is a long shot from here.
The country is so much worried about this issue that no one is even talking about the huge debt it has. It is clear that the country is in dire need of a stimulus.
Jerome Powell, Chair of the Federal Reserve said that the American federal budget has not been on the right path and it has been quite some time it is like this. But he also stated that this is not the right time to worry about such matters as the economic recovery should be the priority.
However, when the economy recovers and comes back to its stable condition then the country should be ready for the huge debt on its shoulders as the US deficit for the fiscal year, 2020 is around $3.13 trillion because the country’s spending has gone up to $6.55 trillion whereas it received only $3.42 trillion which is much lower.
The fiscal deficit for this year is almost triple to what it was last year. This is an alarming situation as it hasn’t been this high since World War 2.
The COVID-19 situation has affected the economy of the world and this is the major reason behind this awful situation. As the government had to implement a lockdown within the country, a lot of businesses had shut down their operations, the ones that remained open had little growth as there were no customers.
So to help these businesses and unemployed Americans, the government had to fund a huge amount of money. This will continue unless the US doesn’t take control of the situation.
According to CBO, the total amount of money American owes to its investors is more than the GPD of the country i.e. around 102% of the GDP. The last time the debt went so high was in 1946.
As the spending continues to be higher than the revenue, the United States can be at the risk of a fiscal crisis. If the interest payment on the debt becomes so large that the country doesn’t have enough to fulfill its needs than this will become a problem.