US government spending “unexpectedly” soared 15% to $646 billion in June. More importantly, interest payments on US debt are set to hit $1 TRILLION per YEAR. This is a debt crisis.
Here’s a chart summarizing federal government spending over the last 20+ years. As zerohedge points out in their note about this report, monthly spending is up by $100 billion compared to last June. Total US debt is on a fast track to $40 trillion+.
Meanwhile, total tax receipts slumped 9.2% from $461 billion to $418 billion. This resulted in a TTM government receipt drop of over 7.3%. The drop is the biggest since June 2020 when the US went into a full lockdown.
With monthly spending skyrocketing, the deficit 9 months into FY2022 is at the 3rd highest in history. At $1.4 trillion, the fiscal 2022 YTD deficit is up 170% year-over-year. The debt ceiling crisis was truly just a distraction from reality. This is a much bigger crisis.
Here’s where it gets even more alarming. If you scroll to page 9 of the report and look at the bottom of the table, you see YTD interest expense. The US has already accumulated a record $652 billion in interest expense this year. It’s concerning how hidden this number is.
Interest expense YTD is 25% higher than what is was last year for the same period which was $521 billion. As interest rates rise, so is the weighted average interest expense on this debt. Currently, the weighted average interest rate is 2.8% and this number will rise.
For example, as
@zerohedge notes, the average interest rate could easily rise to 4% on this debt. With the current debt balance of $32.3 trillion, interest expense would rise to $1.3 trillion per year. Interest expense will soon cost more than any other government outlay.
Sum this all together and we have:
1. Rapidly rising US debt levels
2. Rapidly rising interest rates
3. Interest expense that will soon equal ~25% of government revenue.