Federal Reserve Chairman Jerome Powell has expressed concern over the United States’ fiscal trajectory, stating that the country’s debt is growing at a faster pace than the economy. And, in a recent interview on “60 Minutes,” Powell described the situation as “unsustainable.”
The U.S. national debt surpassed $34 trillion for the first time in early January, a mere three months after crossing the $33 trillion threshold, as per U.S. Treasury data. Congressional attempts to address spending deadlines have been repeatedly deferred since September’s end, as lawmakers struggle to reconcile government funding with the escalating national debt.
National Debt Downgraded
The latest temporary funding measure, passed in January, will see funding for four federal agencies expire on March 1, with the remainder of the government’s funding set to run out a week later. Last spring, a standoff between President Biden and House Republicans over the borrowing limit was narrowly avoided, but not before Fitch Ratings downgraded the U.S. credit rating from “AAA” to “AA+” due to the growing national debt and recurring partisan disputes over the debt limit.
Despite Powell’s concerns about the long-term implications of the national debt, he maintains that the economy is in good shape. The economy has been expanding rapidly, with an annual growth rate of 3.3% in the fourth quarter of 2023. Inflation has also significantly decreased from its 9% peak in the summer of 2022 to 3.4% in December.
However, Powell and the Federal Reserve have faced criticism from both political parties for maintaining interest rates at their highest level in over two decades. Powell has dismissed any suggestions that political considerations will influence the Fed’s decision to cut interest rates in the coming months, stating, “We do not consider politics in our decisions. We never do. And we never will.”
Read more at The Hill.