the budget deficit has exceeded $500 billion

2024-01-12 14:52:00

A number that makes you dizzy. The United States budget deficit amounted to $510 billion from October to December, the first quarter of fiscal year 2024. This represents an increase of 21% compared to the same period last year.

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A jump linked to the increase in interest linked to sovereign debt

This jump is mainly linked to the increase in interest linked to the sovereign debt of the United States: the world’s largest economy has in fact paid out 288 billion dollars over these three months, or 78 billion more, or 37% more than last year. The country’s debt is more than 34,000 billion dollars. In detail, revenues amounted to 1,108 billion dollars in this first quarter, or 8%, or 82 billion dollars, more than last year at the same time. But those gains were erased by an even bigger increase in spending, of 12 percent, or $171 billion, to $1.618 billion.

However, ” deficit to narrow in current fiscal year, largely thanks to a rebound in revenue », Anticipates Bernard Yaros, economist for Oxford Economics, in a note. Indeed, he emphasizes, households “ will have to pay higher capital gains taxes than a year ago “, while ” lawmakers will likely adhere to the spirit of the debt ceiling deal (June 2023), which will impose some restraint on spending just as the last vestiges of pandemic-era fiscal support disappear ».

The trade deficit narrowed in November

Furthermore, the United States trade deficit narrowed in November, following months of increase, due to a combined drop in imports and exports, a sign of the slight slowdown in the American economy, according to the data released Tuesday by the Commerce Department. The goods and services deficit with the rest of the world reached $63.2 billion, down 2% from the previous month. It is slightly lower than expected by analysts, who expected a deficit of $64.7 billion, according to the consensus published by briefing.com. “ The trend in trade flows is one of moderation, given the trajectory of demand and a slowdown in growth, both domestic and international. », Estimated in a note the chief economist of HFE, Rubeela Farooqi.

Inflation is rising once more

Another cause for concern is that inflation started to rise once more in December in the United States following several months of decline, notably due to housing prices. Prices increased by 3.4% year-on-year in December, compared to 3.1% in November, according to the CPI index published Thursday by the Department of Labor, and on which pensions are indexed. This is more than the slight rebound, to 3.2%, which was expected by analysts, according to the Market Watch consensus. Over one month alone, the increase also accelerated, to 0.3% compared to 0.1% the previous month. However, if we remove the volatile prices of food and energy, the so-called core inflation slows down, to 3.9% over one year compared to 4.0% in November, and remains stable over one year. month, at 0.3%. “ Beyond monthly variations, the data overall shows continued but slow progress », nuanced Rubeela Farooqi, economist for High Frequency Economics. The year 2024 should also be marked by a drop in interest rates, which should allow consumers to borrow more easily, a method of purchasing that Americans are fond of, and not just to buy houses.