2024 was the year in which the huge US budget deficit was supposed to have gradually leveled off after two years of crisis. The US was supposed to end the spending spree. All this, on a theoretical level. As of August, the US deficit has exceeded that of 2023.
What does the evidence say?
August’s budget deficit of $380 billion, up more than 50% from July’s $243 billion and up more than 55% from July and 66% from last August…and nearly $100 billion more than the average estimate of $292.5 billion.
The Minsky moment
In the big picture, the US has now passed its Minsky moment in terms of how much it spends on interest on its debt, which just topped $35.3 trillion. dollars – and increases by about 1 trillion. dollars every 100 days.
That means with interest rates at 40-year highs, the amount spent on gross interest in August was $92.3 billion. That means the cumulative total for fiscal year 2024 — with one month left until the end of the fiscal year (which ends on September 30) — just hit an all-time high of $1.049 trillion. dollars, the first time in history that interest on the American debt has exceeded 1 trillion. dollars. And what’s worse, this number isn’t even annual (as explained, it’s only for 11 months of the year). 
Soaring public debt to 122% of GDP within 10 years – Fiscal deficits of 7% The tragic fiscal situation of the USA is reflected in the recent report of the US Budget Office (CBO) for June 2024, as the report talks about budget deficits of even 7%, with public debt soaring to 122% of GDP in 2024. Specifically, according to CBO’s projections, the federal budget deficit for the fiscal year (October 2023-September 2024) was projected to reach $2 trillion. dollars, to increase to 2.8 trillion. by 2034. Deficits equal 7% of GDP in 2024 and 6.5% of GDP in 2025. By 2027 as revenues grow faster than spending. 
Relative to the size of the economy, public debt looks set to swell by 2034, driven by increases in interest and mandatory spending, from 99% of GDP this year to 122% in 2034, surpassing the previous high of 106% of GDP. Economic growth is forecast to slow from 3.1% in 2023 to 2% in 2024 amid higher unemployment and slightly lower inflation. CBO expects the Federal Reserve (Fed) to “respond” with interest rate cuts starting in early 2025. Economic growth is forecast to remain flat at 2% in 2025 before settling to 1.8% in 2026 and the following years. Overall price growth is expected to slow slightly in 2024. Inflation – as measured by the price index for personal consumption expenditures (PCE) – will ease to 2.7% in 2024 and then approach the 2% target set by has set the Fed.
