The Trump administration is saying that it will have to take on more than $1.338 trillion in new debt, doubling what it did last year, which was only $546 billion.
The Treasury department said that most of the debt was due to higher government spending and low tax revenues, according to the Wall Street Journal.
This is the highest annual debt issuance since around the time George W. Bush left office and the U.S. was dealing with a recession.
President Trump and Republicans overhauled tax laws last year, which Democrats said would serve to only give tax cuts mostly to the top 1% percent, and in return, government revenues would be hurt. We’ve seen this rodeo before during the Bush years. Yet, here we are again.
Also per the Journal: Debt levels are rising at the same time the Federal Reserve is raising interest rates. The combination of the two could be leading to yet another recession.
Former Federal Reserve Chair Janet Yellen doesn’t think the Trump administration is forecasting economic growth correctly. Not at all. They state that 3% is correct figure but “unless there is an increase in productivity or population growth through an immigration boom (something Trump is trying to prevent), she doesn’t see it happening.”
As far as the upcoming recession, Guggenheim Partners says that all you need to do is look at the yield curve. Global chief investment officer Scott Minerd wrote to his clients:
“While there is little risk of downturn in the near term, more restrictive monetary policy will overtake an overheating economy. Despite prevailing sentiment to the contrary, the flattening yield curve remains a powerful indicator of coming recession.”
They predict all the indicators show the next U.S. recession beginning in early 2020, a presidential election year. That’s not good news for Trump, who right now is trying to blame the volatile stock market on anybody but himself.