U.S. Debt Tops $20 Trillion - Stocks Soar To Record Highs
1. National Debt Tops $20 Trillion, Equal to 107% of GDP
2. Debt Held by the Public vs. Total National Debt
3. IMF: Global Economy Looking Strong in 2017 & 2018
4. Global Economy Doing Something It Hasn’t in 7 Years
5.Fed Meeting Today, Tomorrow – Change Expected
We touch on several bases in today’s letter that are not entirely related. We begin with the 800-pound gorilla in the room – the fact that the US national debt topped $20 trillion last week. With everything else going on in the world right now, this scary milestone received little attention in the media, but I have some thoughts on the subject.
And there are several other topics I will raise in today’s letter related to the improving global economy that I think you’ll find interesting. We’ll conclude today’s discussion with my thoughts on this week’s Fed policy meeting which ends tomorrow and what we might expect to hear from Janet Yellen & Company Wednesday afternoon. Let’s get started.
National Debt Tops $20 Trillion, Equal to 107% of GDP
The US national debt reached $20 trillion for the first time ever last week after President Trump signed a bipartisan bill temporarily raising the nation's debt limit for three months.
While at Camp David, Mr. Trump signed a bill to increase the statutory debt limit last Friday by almost $318 billion, according to the Treasury Department. Before the bill's passage, the US national debt was sitting at the $19.84 trillion limit. The $318 billion increase raised the US national debt to $20.17 trillion on Friday.
The legislation allowed the Treasury Department to start borrowing again immediately after several months of using "extraordinary measures" to avoid a financial default. The bill passed in the Senate last Thursday 80-17 and in the House 316-90 on Friday. Around $15 billion in emergency funding for Hurricane Harvey recovery efforts was attached to the borrowing measure.
Mr. Trump shocked many Republicans by cutting an unexpected deal with House Minority Leader Nancy Pelosi and Senate Minority Leader Chuck Schumer last Wednesday, which permitted the three-month debt ceiling increase in exchange for quick action on Hurricane Harvey aid and short-term spending.
The most important point in the chart above is that our national debt is now well over 100% of Gross Domestic Product. This percentage will only go higher over time due to running budget deficits every year. The Congressional Budget Office (CBO) estimates the deficit for FY2017, which ends this month, will be between $600 and $700 billion.