Powell Thinks The U.S. Government Is 'On An Unsustainable Fiscal Path'

In a recent interview, Federal Reserve Chairman Jerome Powell said, The US is on an unsustainable fiscal path.

When asked whether the U.S. national debt posed a threat to the economy, Powell said, The U.S. federal government's on an unsustainable fiscal path. And that just means that the debt is growing faster than the economy. So, it is unsustainable. I don't think that's at all controversial.

Data from the U.S. Treasury Department shows that last month, the scale of the U.S. national debt exceeded $34 trillion for the first time in early January, only a little over three months after it surpassed $33 trillion.

Since the end of September last year, the U.S. Congress has postponed the spending deadline three times. Amid the tension of burgeoning national debt, Congress is working to provide funding for the government.

According to the latest stopgap measure passed in January, funding for four federal agencies will expire on March 1st. Funds for other parts of the government will run out by March 8th.

Though Powell has long been concerned about U.S. debt issues, he noted that members of the Fed's rate-setting committee believe that the economic situation is still good.

Senior officials of the Federal Reserve hinted at lowering interest rates in 2024, but they did not reduce the rates as expected after the January meeting last Wednesday. In the post-meeting press conference, Powell hinted that a rate cut was not up for discussion in March and further emphasized this stance in the interview aired Sunday.

Powell said: I would say, and I did say yesterday, that I think it's not likely that this committee will reach that level of confidence in time for the March meeting, which is in seven weeks.

He added, The kinds of things that would make us want to move sooner would be if we saw weakness in the labor market or if we saw inflation really persuasively coming down.

Powell also rejected speculation that politics would play a role in the Fed's interest rate decisions over the next few months. He said: We do not consider politics in our decisions. We never do. And we never will.