{"id":9521,"date":"2021-04-22T13:43:17","date_gmt":"2021-04-22T13:43:17","guid":{"rendered":"https:\/\/zackspcg.com\/blog\/?p=9521"},"modified":"2022-02-26T13:05:52","modified_gmt":"2022-02-26T13:05:52","slug":"mitchs-thoughts-on-the-record-u-s-deficit","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/mitchs-thoughts-on-the-record-u-s-deficit\/","title":{"rendered":"Mitch&#8217;s Thoughts on the Record U.S. Deficit"},"content":{"rendered":"\n<p><em>Olivia and Eric R.\nask: <\/em>Good Morning Mitch, we would like to hear your thoughts on the ever-widening\nU.S. budget deficit. The U.S. seems to break new records with every crisis, and\nmy husband and I are wondering when the chickens are finally going to come home\nto roost. <\/p>\n\n\n\n<p><strong>Mitch\u2019s Response:<\/strong><\/p>\n\n\n\n<p>Thanks for writing, Olivia and Eric. I know your concern is\nshared by many other readers, especially now, so I\u2019m glad you asked.<\/p>\n\n\n\n<p>Let\u2019s go over some of the hard data first. As you mention in\nyour question, the U.S. budget deficit swelled to a record $1.7 trillion in the\nfirst half of the fiscal year \u2013 making it twice as large as it was this time a\nyear ago. Last month alone, the budget deficit was $660 billion, which is a\nstaggering 454% higher than it was in March 2020. <\/p>\n\n\n\n<p>_________________________________________________________________________<\/p>\n\n\n\n<p><strong><a href=\"https:\/\/go.steadyinvestor.com\/arrow-use-volatility-to-your-advantage?source=zim&amp;medium=blog&amp;term=mitchsmailbox_zim_2021_04_22&amp;content=volatility_can_be_good_guide\">How to Use Market Volatility to Your Advantage!<\/a><\/strong><a href=\"https:\/\/go.steadyinvestor.com\/arrow-use-volatility-to-your-advantage?source=zim&amp;medium=blog&amp;term=mitchsmailbox_zim_2021_04_22&amp;content=volatility_can_be_good_guide\"><br><\/a> &nbsp;<br>In times of volatility, remember that dealing with the turbulence in the market is normal. Even so, the sudden ups and downs of the market can be very challenging to manage. But, even when your uncertainty levels are high, do you know that there are several positive aspects of volatility? <br> &nbsp;<br>If you have $500,000 or more to invest, get our free guide, <em>\u201cUsing Market Volatility to Your Advantage,\u201d<\/em> and learn our insights, based on decades of experience, about how a volatile market may be able to actually help investors refine their strategies and potentially generate solid returns over time.<br> &nbsp;<br> You\u2019ll get our ideas on:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>How market volatility can \u201cshake up\u201d complacent investors<\/li><li>Potential bargains that may be uncovered through turbulence<\/li><li>Why volatility may help prevent overheating and market \u201cbubbles\u201d<\/li><li>What history shows us about opportunities for steady investors in turbulent markets<\/li><li>Plus, more ways you may be able to benefit from a volatile market<\/li><\/ul>\n\n\n\n<p><strong><a href=\"https:\/\/go.steadyinvestor.com\/arrow-use-volatility-to-your-advantage?source=zim&amp;medium=blog&amp;term=mitchsmailbox_zim_2021_04_22&amp;content=volatility_can_be_good_guide\">Download Our Guide, \u201cUsing Market Volatility to Your Advantage\u201d<\/a><sup><a href=\"https:\/\/go.steadyinvestor.com\/arrow-use-volatility-to-your-advantage?source=zim&amp;medium=blog&amp;term=mitchsmailbox_zim_2021_04_22&amp;content=volatility_can_be_good_guide\">1<\/a><\/sup><\/strong><\/p>\n\n\n\n<p>_________________________________________________________________________<\/p>\n\n\n\n<p>All told, the Congressional Budget Office (CBO) estimates\nthat the 2021 fiscal year (which ends on September 30) deficit will reach $2.3\ntrillion, which is actually lower than 2020\u2019s deficit but still marks\nconsecutive years of extraordinary spending. As a result of sharp upticks in\nspending, U.S. federal debt is expected to push well past 100% of GDP \u2013 levels\nnot seen since 1945 and 1946 in response to World War II. <\/p>\n\n\n\n<p>Reading these figures probably gives you and many readers\nthe sense that such spending is not sustainable, and we\u2019re destined for some\nsort of reckoning. I understand the concern, but my thinking is a bit different\nas it relates to debt and deficits. While I would agree on record-breaking deficits,\nevery year is not sustainable, I also think the U.S. has some wiggle room with\ninterest rates so low. Case in point: even though debt expanded by $4 trillion\nlast year, interest payments on that debt declined by approximately 8%. All\nthings considered, the U.S.\u2019s borrowing costs are still very low. <\/p>\n\n\n\n<p>Low borrowing costs are not a free pass to taking on debt in\nperpetuity \u2013 there are limits. But the market would signal if the borrowing had\nreached dangerous levels, with soaring interest rates and inflation \u2013 neither\nof which we have seen at this stage. As long as buyers in the global capital\nmarkets want U.S. debt \u2013 which they do \u2013 we can issue it and finance our\nborrowing at low rates. <\/p>\n\n\n\n<p>The reason U.S. debt is reliable is because of the\ndiversity, strength, and openness of the economy that underpins and supports\nborrowing. The U.S. has the largest, most diverse economy in the world, and\nglobal economies recognize our strengths. Consider that even as borrowing soared,\ntax revenue also went up (though not by nearly as much). <\/p>\n\n\n\n<p>I\u2019m not saying the debt and additional spending are no cause\nfor concern. Again, I think there are limits. But I also think the U.S. has\nunique characteristics that put it in a very strong position to borrow, the\nmost important of which are low borrowing costs combined with a diverse and\nstrong \u2013 and strengthening \u2013 economy. At some point in the future, we will need\nto claw our way back to annual budget surpluses and scale back our debt, but I\nam not convinced that time is now. &nbsp;<\/p>\n\n\n\n<p>In turbulent\nand uncertain times, investors still have an advantage over market volatility.\nThere are positive aspects of volatility that you don\u2019t want to overlook. You\nhave the opportunity to make the most out of these challenging times!<\/p>\n\n\n\n<p>To give\ninsight into some of these positives, I am offering all readers our guide\n\u201cUsing Market Volatility to Your Advantage\u201d<sup>2<\/sup>. This guide&nbsp;can\nhelp you learn about our insights, based on decades of experience, about how a\nvolatile market may be able to actually help investors refine their strategies\nand potentially generate solid returns over time.<br>\n&nbsp;<br>\nYou\u2019ll get our ideas on:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>How market volatility can \u201cshake up\u201d complacent investors<\/li><li>Potential bargains that may be uncovered through turbulence<\/li><li>Why volatility may help prevent overheating and market \u201cbubbles\u201d<\/li><li>What history shows us about opportunities for steady investors in turbulent markets<\/li><li>Plus, more ways you may be able to benefit from a volatile market<\/li><\/ul>\n\n\n\n<p>If you have $500,000 or\nmore to invest, download this free guide today by clicking on the link below.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>A look at the potential impact of the U.S. budget deficit and debt levels that are well over 100% of GDP <\/p>\n","protected":false},"author":3,"featured_media":7436,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[66,71],"tags":[],"class_list":["post-9521","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mitchs-mailbox","category-private-client-group"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/9521","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=9521"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/9521\/revisions"}],"predecessor-version":[{"id":10411,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/9521\/revisions\/10411"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=9521"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=9521"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=9521"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}