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The U.S. fiscal deficit for fiscal year 2024, which ended last September, exceeded $1.8 trillion.
It increased by more than 8% compared to the previous year. In terms of deficit, it was the third largest in history.
More than 60% of the total fiscal deficit, or $1.16 trillion (approximately 1,588 trillion won), was interest expenses.
This means that you are taking out debt to pay off your debt.
The U.S. Treasury announced on the 18th (local time) that the U.S. fiscal deficit for fiscal year 2024 reached $1.833 trillion (about 2,510 trillion won).
Excluding the special circumstances of 2020 and 2021 during the COVID-19 pandemic, this is actually the largest deficit in history.
The deficit increased by $138 billion in one year.
Although tax revenues reached a record high of $4.9 trillion, this did not prevent the deficit from increasing significantly.
Although tax revenues were the highest ever, they fell far short of the original target of $6.75 trillion.
As a result, the total debt of the U.S. federal government reached $35.7 trillion (about KRW 4.89 trillion), an increase of $2.3 trillion in one year.
The reason for the sharp increase in the fiscal deficit was the increase in debt costs due to the Federal Reserve’s interest rate hike.
Interest expenses exceeded $1 trillion for the first time in history, reaching $1.16 trillion. It accounted for more than 63% of total debt.
Net interest expenses, excluding interest income earned by the federal government from investments, were $882 billion, also the third highest in history.
Excluding social security and medical security expenses, the expenditure was larger than any other item.
The average interest rate on government debt in fiscal 2024 was 3.32%, up from 2.97% a year ago.
Federal government debt to U.S. gross domestic product (GDP) has exceeded 6%.
This is a scale that overwhelms the average over the past 50 years. According to the Congressional Budget Office (CBO), the proportion of federal government debt to U.S. GDP over the past 50 years was only 3.7%.
CBO predicts that federal government debt will continue to grow, reaching $2.8 trillion by 2034.
In addition, the total debt to GDP ratio is currently close to 100%, but is expected to jump to 122% in 2034.
dympna@fnnews.com Reporter Song Kyung-jae
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