American economists agree that the US mounting national debt presents significant challenge for the economy. Federal Reserve Chairman Jerome Powell recently warned that high national debt level could lead to recession, with falling public finance policy. According to the Congressional Budget Office, the US budget deficit touched $1.9 trillion in the current fiscal year. The Congressional Budget Office also expects the federal budget deficit to hit $3.7 trillion by the end of fiscal year 2020.
Thus, the USA may reach record-breaking national debt, RISS expert outlines. “It is difficult to remember other indebted countries with such a huge public debt deficit; they are typically engaged in war,” Zakharov said. The US national debt total has exceeded $26 trillion for the first time in American history. Lower interest rates make it easier for Washington to service it.
“Now the Federal Reserve has cut interest rates to almost zero, expanded its lending program and purchase of government bonds. Trump has been trying to achieve such actions from the FED for two years. It is difficult to say whether the measures taken can be a tool to help overcome the economic crisis. Such large-scale experiments with the dollar can have serious negative consequences. The banking sector may be destabilized, investments in private financial instruments can be undermined, and the investment attractiveness of the American economy may be diminished,” RISS expert concluded.