In recent years, the United States has seen significant economic growth and financial market recovery. With the country’s unemployment rate falling and consumer confidence growing, there appears to be increased optimism about the state of American finances. As the economy continues to improve, it is essential to take a closer look at the current financial state of the USA. This article will provide an overview of the current state of USA finances, including details about the national debt, budget, taxes, and consumer trends.
Current National Debt
The current national debt of the United States is over $22.5 trillion. This figure is staggering and increasing more than before. And alarmingly, the debt-to-GDP ratio, which measures whether a country’s debt is at a sustainable level in relation to its economic output, is currently at its highest level since World War II. This means that a large portion of the US budget is being spent servicing the national debt.
The federal budget is the governmental document that details how the government will spend money in the coming fiscal year. Currently, the US budget is in deficit– spending more than it receives. Interest on the national debt accounts for more than 10% of all federal spending, with spending for defense and social programs accounting for about 40% each.
Tax Revenues
Tax revenues account for the largest portion of the federal government’s income. In 2018, the United States collected more than $3.3 trillion in taxes and fees. The top source of revenue was individual income taxes, which accounted for nearly 50 percent of all tax revenues. Corporate income taxes, payroll taxes, and excise taxes made up most of the remaining taxes received.
Tax reform is also an important element of the US fiscal policy. The Tax Cuts and Jobs Act of 2017, which was signed by President Donald Trump, reduced the income tax rate for many upper-income taxpayers and provided a one-time tax reduction for many corporations.
Consumer Spending
Consumer spending makes up a significant portion of the US economy. In 2018, total spending by consumers in the US amounted to $14.3 trillion. This is up from $13.3 trillion in 2017. Most of the growth was driven by spending on services, such as health care and education. Consumer spending on durable goods, such as furniture and automobiles, also increased in 2018.
Consumer debt is another important factor in the overall health of the economy. As of the fourth quarter of 2018, total household debt in the United States stood at over $13 trillion, with mortgage debt still making up the largest portion of all debt at around $9 trillion. Credit card, student loan, and auto loan debt also make up a significant portion of total consumer debt.
Financial Stocks
The performance of financial stocks not only has an effect on the US economy, but also on global economic health. In 2018, the three major US stock indices, the Dow, the S&P 500, and the Nasdaq, all achieved record highs. And, while they are still well below their pre-crisis peaks, they have been on the rise since 2013.
The financial situation in the United States is complex. A combination of tax reform, government spending, and consumer trends all play an important role in determining the overall fiscal health of the country. The national debt still continues to rise, but the stock market and consumer spending have both been on the increase. By understanding the current state of USA finances and keeping an eye on future developments, one can gain a better understanding of the overall economic health of the United States.
