forex US Faces the Largest Budget Deficit in 7 Years

[Anzo Lim 0]

US Treasury noted last Friday (October 25th ) that the Federal budget deficit in the 2019 fiscal year reached its highest in 7 years, while growing revenue has been offset by increase in spending and debt payment. This has been the first time since early 1980s that US sees deficit grow for 4 straight years.

 

The Federal budget deficit in the 2019 fiscal year expanded to US$984 billion and sits at 4.6% of the GDP. Deficit of the last fiscal year was US$779 billion, equivalence of 3.8% of the GDP. While government income is up by 4% at US$3.5 trillion,spending has grown by 8.2% to US$4.4 trillion.

 

US economy registered a 2.9% growth in 2018, yet the economy is losing momentum as stimulating effect of the 1.5 trillion tax cut scheme fades. The prolonged trade war between China and the US hurts business investment, while there has been increased spending in Medicare, Social Security and military.

 

In addition, the country also faces the challenges of an aging population, while spending on social security, federal medicare and pension scheme at the current level is unsustainable.From a long term perspective, a constantly expanding fiscal deficit will weaken the dollar for sure.

 

USD daily pivot points: 97.75---97.79

 

S1: 97.64          R1: 97.87

 

S2: 97.54          R2: 98.00

 

Source: WikiFX App