The United States is on an "unsustainable" path with regard to its national debt and it is time to address the issue, Federal Reserve chief Jerome Powell said in an interview aired Sunday.
The US national debt currently stands at more than $34 trillion, according to the US Treasury. "In the long run, the US is on an unsustainable fiscal path. The US federal government's on an unsustainable fiscal path. And that just means that the debt is growing faster than the economy," Powell told CBS' "60 Minutes" news program.
"It's probably time, or past time, to get back to an adult conversation among elected officials about getting the federal government back on a sustainable fiscal path," he said in the interview, which was recorded on Thursday.
"I do think it's pretty widely understood that it's time for us to get back to putting a priority on fiscal sustainability. And sooner's better than later."
Last week, the Fed voted to leave interest rates unchanged for the fourth straight meeting, and while it said at the time that "risks to achieving its employment and inflation goals are moving into better balance," it also hinted that rate cuts were not imminent.
In the CBS interview, Powell reiterated that stance, saying it was unlikely that a rate cut would come at the next meeting of the rate-setting Federal Open Market Committee (FOMC) in March. "I think it's not likely that this committee will reach that level of confidence in time for the March meeting, which is in seven weeks," Powell said.
When asked about what conditions needed to be in place for an eventual cut, Powell replied: "It doesn't need to be better than what we've seen, or even as good. It just needs to be good."
He added: "The best we can do is to weigh the risk of moving too soon against the risk of moving too late and make that judgment in real time. So that time is coming, I would say, based on what we expect." The Fed's benchmark interest rate is currently steady at its 23-year high, between 5.25 and 5.50 percent.
Powell said he believed inflation would continue to taper off in the first half of 2024, and the Fed would reassess its interest rate target in March.
"Nothing has happened in the meantime that would lead me to think that people would dramatically change their forecasts," he told CBS.
FAQs
Nearly half of all US foreign-owned debt comes from five countries. All values are adjusted to 2023 dollars. As of January 2023, the five countries owning the most US debt are Japan ($1.1 trillion), China ($859 billion), the United Kingdom ($668 billion), Belgium ($331 billion), and Luxembourg ($318 billion).
How much US debt is owned by the Federal Reserve? ›
Even as the Fed has begun to scale back its holdings, it held nearly $6.1 trillion in government bonds – almost a fifth of the entire public debt – as of Sept. 30, 2022, the most recent data available. A decade earlier, by contrast, the Fed's share of the debt was just under 11%.
Who bears the burden of the US federal debt? ›
When the government pays for itself by borrowing money instead of raising taxes, critics claim the burden is shifted from current taxpayers to future taxpayers. According to this view, the national debt necessitates a future tax increase on our children and grandchildren.
Has the US ever paid down national debt? ›
By January of 1835, for the first and only time, all of the government's interest-bearing debt was paid off. Congress distributed the surplus to the states (many of which were heavily in debt). The Jackson administration ended with the country almost completely out of debt!
Is China in more debt than the US? ›
Debt as a share of GDP has risen to about the same level as in the United States, while in dollar terms China's total debt ($47.5 trillion) is still markedly below that of the United States (close to $70 trillion). As for non-financial corporate debt, China's 28 percent share is the largest in the world.
What country does the US owe the most money to? ›
As of July 2020, Japan overtook China and became the largest foreign debt collector for the U.S. The United States currently owes Japan about $1.2 trillion according to the U.S. Treasury report.
What country is in the most debt? ›
Japan has the highest percentage of national debt in the world at 259.43% of its annual GDP.
How can the US get out of debt? ›
- Bonds. Using Debt to Pay Debt. ...
- Interest Rates. Maintaining interest rates at low levels can help stimulate the economy, generate tax revenue, and, ultimately, reduce the national debt. ...
- Spending Cuts. From 1921 to 1974, the President led the government budgeting process. ...
- Raising Taxes. ...
- Bailout or Default.
One of the main culprits is consistently overspending. When the federal government spends more than its budget, it creates a deficit. In the fiscal year of 2023, it spent about $381 billion more than it collected in revenues. To pay that deficit, the government borrows money.
Why is US debt not a problem? ›
The government can easily service its debt because of its unlimited taxing authority and ability to issue more US Treasury securities to repay maturing securities.
Around 70% of Japanese government bonds are purchased by the Bank of Japan, and much of the remainder is purchased by Japanese banks and trust funds, which largely insulates the prices and yields of such bonds from the effects of the global bond market and reduces their sensitivity to credit rating changes.
Which US states are not in debt? ›
Top 5 States With the Least Debt
- Oklahoma: Least Indebted State. Score: 0 out of 100. The Sooner State has the fourth-lowest government debt in the nation at just $4,786.67 per capita. ...
- Iowa. Score: 4.65 out of 100. ...
- New Hampshire. Score: 17.44 out of 100. ...
- Nebraska. Score: 17.44 out of 100. ...
- Ohio. Score: 20.93 out of 100.
Russia National Government Debt reached 284.6 USD bn in Apr 2024, compared with 283.2 USD bn in the previous month. Russia National Government Debt data is updated monthly, available from May 2009 to Apr 2024. The data reached an all-time high of 384.2 USD bn in Jun 2022 and a record low of 86.1 USD bn in May 2009.
Who has the worst national debt? ›
The United States has the world's highest national debt with $30.1 trillion owed to creditors as of the first quarter of 2023.
Who holds 74% of the debt in the United States? ›
Who owns this debt? The public owes 74 percent of the current federal debt. Intragovernmental debt accounts for 26 percent or $5.9 trillion.
Who holds the largest fraction of the US public debt? ›
Domestic Holders of Federal Debt
The Federal Reserve, which purchases and sells Treasury securities as a means to influence federal interest rates and the nation's money supply, is the largest holder of such debt.
Who are the top three holders of public debt in the United States? ›
Foreign holdings
Including both private and public debt holders, the top three December 2020 national holders of American public debt are Japan ($1.2 trillion or 17.7%), China ($1.1 trillion or 15.2%), and the United Kingdom ($0.4 trillion or 6.2%).
Who are the owners of public debt? ›
Ownership of the Debt
The Debt Held by the Public is all federal debt held by individuals, corporations, state or local governments, Federal Reserve Banks, foreign governments, and other entities outside the United States Government less Federal Financing Bank securities.
