The U.S. Treasury Department reported a record federal budget deficit of $1.833 trillion for the 2024 fiscal year, driven by interest on federal debt surpassing $1 trillion for the first time. Factors contributing to this rise include high deficits, increased debt levels, spending on COVID-19 relief, tax cuts, and rising social security and Medicare costs.
The dollar’s global dominance may be at risk due to the mounting national debt, which could lead to slower economic growth, unemployment, and reduced equity wealth. The weakening dollar could make U.S. companies less attractive to foreign markets, impacting financing and imports. The Federal Reserve’s interest rate hikes aim to control inflation but may have consequences for developing countries.
Despite the challenges, understanding and addressing the economic implications of the U.S. debt burden are crucial for managing global financial stability and ensuring sustainable growth.