Federal Reserve Chairman Jerome Powell is “very worried” about the ballooning amount of United States debt.
“I’m very worried about it,” Powell said at The Economic Club of Washington, D.C. “From the Fed’s standpoint, we’re really looking at a business cycle length: that’s our frame of reference. The long-run fiscal, non-sustainability of the U.S. federal government isn’t really something that plays into the medium-term that is relevant for our policy decisions.”
However, “it’s a long-run issue that we definitely need to face, and ultimately, will have no choice but to face,” he added.
The Fed chief’s comments came as the annual U.S. deficit reaches new sustained highs above $1 trillion, a fact many economists worry could spell trouble for future generations. While annual deficits have topped $1 trillion before, prior budget shortfalls have often occurred during times of economic distress.
In 2009, for example, deficits ballooned as the economic growth contacted. The unemployment rate rocketed, revenues plunged and the federal government tried to cushion the negative impact with massive spending bills, pushing the annual deficit to nearly $1.5 trillion.
Total U.S. debt is about $21.9 trillion, of which $16 trillion is owed by the public.