A foundation created by billionaire Peter G. Peterson says rising interest rates will push the US government’s interest payments to over half a trillion dollars this year.
According to a recent Peterson Foundation report, the US government will make $6.4 trillion in total payments this year, $81 billion higher than the federal outlays recorded last year.
The surge in payments could largely be attributed to the Federal Reserve’s aggressive interest rate hikes over the past year. Prior to this month’s pause, the Fed has imposed 10 straight rate hikes in 14 months, driving its benchmark interest rate to 5.08% – a level not witnessed since 2007.
The Peterson Foundation says the US government is expected to shell out an additional $187 billion this year just to pay off the interest of its ballooning debt.
“The government’s interest payment on federal debt, which is primarily driven by the size of the debt held by the public and recent interest rates, is projected to total $663 billion (2.5% of GDP) in 2023, a 39% increase from the $476 billion recorded for last year.
Much of the growth in interest costs is driven by higher interest rates, which have been raised 10 times since early 2022 by the Federal Reserve in response to high inflation.”
At time of writing, the US government’s national debt stands at over $32.17 trillion. The country’s gross national debt is projected to ascend to almost $52 trillion within 10 years.
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