What Are Interest Costs On The National Debt?...projected to exceed the previous high relative to the size of the economy in 2025...caused by a structural mismatch between spending and revenues

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Posted on 12/05/2024 1:22:36 PM PST by daniel1212

In 2023, the federal government spent $658 billion on net interest costs on the national debt. That total, which grew by 38 percent from $476 billion in 2022, was the largest amount ever spent on interest in the budget and totaled 2.4 percent of gross domestic product (GDP). Interest costs are on track to become the largest category of spending in the federal budget...

In the late 1970s, the increasing national debt and higher interest rates led to a boost in interest costs, which reached a historic high of 3.2 percent of GDP in 1991 (looking at interest costs as a percentage of the economy allows for a standardized comparison over time). But smaller budget deficits and lower interest rates decreased that ratio over the following decade...

Between 2007 and 2020, outlays for interest remained steady at around 1.5 percent of GDP (even though borrowing related to the financial crisis and pandemic was quite high), mostly because of low interest rates. But due to the recent rise in interest rates, as well as the mounting public debt, interest payments have grown rapidly over the past two years, and they are projected to continue growing.

The Congressional Budget Office (CBO) projects that interest costs will exceed their previous high relative to the size of the economy, reaching 3.2 percent of GDP ($951 billion) in 2025....

Before the past year or so, short-term interest rates in recent decades were declining or near zero;..., the Fed kept the federal funds rate near zero to support economic recovery. However, in response to the significant rise in inflation in 2022, the Fed raised the target range for the federal funds rate (which the Fed uses to moderate interest rates) to between 5.25 and 5.50 percent — a 22-year high.

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excerpt. . No way to run a business.

1 posted on 12/05/2024 1:22:36 PM PST by daniel1212

To: daniel1212

2 posted on 12/05/2024 1:25:58 PM PST by E. Pluribus Unum (The worst thing about censorship is █████ ██ ████ ████ ████ █ ███████ ████. FJB.)

To: E. Pluribus Unum

3 posted on 12/05/2024 1:28:36 PM PST by desertsolitaire ( Lee Harvey Oswald and the Bands final performance)

To: E. Pluribus Unum

4 posted on 12/05/2024 1:29:27 PM PST by Mouton (A 150MT hit may not solve our problems now but is a good start. )

To: Mouton

5 posted on 12/05/2024 1:39:22 PM PST by citizen (Political incrementalism is like compound interest for liberals - every little bit adds up.)

To: daniel1212

6 posted on 12/05/2024 1:42:24 PM PST by plain talk

To: daniel1212

7 posted on 12/05/2024 1:44:38 PM PST by TiGuy22

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