The federal IOU is now at $34.5 trillion, or about $11 trillion higher than where it stood in March 2020.
Fed Chair Jerome Powell said recently that "this is something that elected people need to get their arms around sooner rather than later."Government debt that has swelled nearly 50% since the early days of the Covid pandemic is generating elevated levels of worry both on Wall Street and in Washington.
"We're running big structural deficits, and we're going to have to deal with this sooner or later, and sooner is a lot more attractive than later," Fed Chair "Since the Great Depression, deficits have exceeded that level only during and shortly after World War II, the 2007–2009 financial crisis, and the coronavirus pandemic," the report stated.
So far, that hasn't been the case: Foreign holdings of U.S. federal debt stood at $8.1 trillion in March, up 7% from a year ago, according to Treasury Department data released Wednesday. Risk-free Treasurys are still seen as an attractive place to park cash, but that could change if the U.S. doesn't rein in its finances.More immediately, there are concerns that rising bond yields could spill over into the equity markets.
The presidential election could make some modest differences in the fiscal situation. Debt has soared under President Joe Biden and had escalated under his Republican challenger, former President Donald Trump, following the aggressive spending response to the pandemic.
Source: Financial Digest (financialdigest.net)
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