The economic health of America, which is called the world’s largest superpower, is going through a critical phase these days. On one hand, the fierce war with Iran and on the other hand, skyrocketing inflation has broken the back of the superpower. The situation is such that America’s total debt has reached its highest ever level of 39 trillion dollars. This figure, which came within a few weeks of the Iran-Israel war, has worried economists all over the world. Let us understand why America’s economy is currently stuck in a maze of uncertainty.
Trump’s pressure on Fed Reserve
Despite strong pressure from US President Donald Trump, the US central bank US Federal Reserve has taken a bold decision of not making any changes in interest rates. The Fed has kept rates at a range of 3.50% to 3.75%. Fed Chairman Jerome Powell has made it clear that unless inflation comes down, there can be no question of cutting interest rates. He has warned that the ongoing war with Iran is adding fuel to the fire of inflation. According to Powell, it is too early to accurately assess the economic impact of the war, but it is certain that it is putting huge pressure on the American market.
mountain of debt
The speed at which America’s government debt is increasing is frightening. Just five months ago it was at $38 trillion and now it has crossed $39 trillion. Peter G. Michael Peterson, CEO of the Peterson Foundation, has warned that if the pace continues, America’s debt will reach an ‘alarming’ level of $40 trillion by the end of this year. He has called it ‘unsustainable’ i.e. a burden which will be impossible to handle.
heavy price of war
According to White House economic advisor Kevin Hassett, America has so far suffered a direct loss of more than $12 billion in this ongoing war with Iran. No one knows when the war will end. The government’s priorities have changed due to increased defense spending, immigration enforcement and new tax laws, due to which Trump’s election promise to reduce the debt appears incomplete for the time being.