US: Debt growing larger – ANZ

After a brief ‘shutdown’, Congress passed a two-year deal that will boost federal spending by almost USD300bn and suspend the debt ceiling for a year, points out Philip Borkin, Senior Economist at ANZ.

Key Quotes

“The non-partisan Committee for a Responsible Federal Budget project the budget deficit could approach $1.2 trillion by 2019. For an economy that is at or near full employment and is already getting a large fiscal boost from tax cuts, this lift in spending could potentially add to inflation pressures (and supply concerns in bond markets), which given the turmoil on equity markets right now that very fear is obviously highly topical.”