According to Treasury Department data released on September 9, 2022, the U.S. national debt is rapidly approaching $31 trillion. This growth could impact the economy as well as consumers’ plans for building wealth over the long term.
At over $30 trillion, the national debt is currently larger than at any other point in history.
The national debt surpassed $30 trillion for the first time in February 2022. At the start of September 2022, the national debt had grown to $30.9 trillion. Of this amount, $24.3 trillion is “debt held by the public,” which includes debt held by individuals, corporations, state or local governments, and Federal Reserve banks. It also includes debt held by foreign governments and other entities outside the United States government, generally in the form of securities like Treasury bills and U.S. savings bonds. The other $6.6 trillion of the national debt is intragovernmental holdings, or money the federal government owes to other U.S. government agencies.
On September 14, 2022, the Treasury Department released data showing that the U.S. government posted a $220 billion budget deficit for August 2022, up 29% from the $171 billion gap reported in the same month last year.
The national debt is projected to grow even larger.
New programs could grow the size of the national debt to new record highs. On September 23, 2022, the nonpartisan Congressional Budget Office (CBO) projected that President Biden’s student loan forgiveness plan could add $400 billion to the size of the ballooning national debt.
The CBO also projects that interest payments on the national debt will be the fastest-growing part of the federal budget in fiscal year 2022. The Committee for a Responsible Federal Budget (CRFB) predicts interest payments will triple from $400 billion in fiscal year 2022 to $1.2 trillion by 2032, costing $8.1 trillion over the next decade.
The fast-paced growth of the national debt could impact markets and consumers over the long term.
In 2021, the CBO wrote, “A growing debt burden could increase the risk of a fiscal crisis and higher inflation as well as undermine confidence in the U.S. dollar, making it more costly to finance public and private activity in international markets.”
Record high U.S. federal debt may also affect consumers. An increase in the federal debt could reduce confidence in America’s ability to repay its debtors, which in turn could cause a drop in the dollar compared to other currencies. A falling U.S. dollar could contribute to increased inflation and hamper the growth potential of consumer portfolios.
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