It goes without saying that an enormous budget deficit in the US poses a threat to the fiscal health of the top global economy. Oddly enough, a federal budget deficit was snowballing even in times of economic growth. However, amid the COVID-19 pandemic, experts point out an ominous trend.
The US Treasury Department reported that a budget deficit swelled twice to $284.071 billion as of the end of October from a year ago. This happened for obvious reasons: staggering public spending and low budget revenues. As a result, the federal government is now running a huge deficit not seen since World War II.
Experts pinpoint the pandemic-driven crisis as the catalyst for elevated government spending. Amid emergency support measures, public spending increased by 37.3% to $521.769 billion. At the same time, revenues dropped by 3.2% to $237.698 billion excluding tax revenues.
The US current account deficit ballooned nearly three times to $3.132 trillion in 2020 compared to 2019. Besides, the federal deficit surged to 15.2% of GDP, the highest level since 1945. Interestingly, even in times of the financial crisis in 2009, the current account deficit was measured at $1.413 trillion that was 9.8% of the national economic output. The last time when the US federal budget logged a proficit was in 2001.
