In a prepared speech to the Sacramento Metropolitan Chamber of Commerce today, U.S. Treasury Secretary Janet Yellen warned of the potential for severe economic consequences if the House does not address and raise the debt ceiling.
“It is unlikely that the federal government would be able to issue payments to millions of Americans, including our military families and seniors who rely on Social Security,”
The debt ceiling is an upper limit set on the amount of money that the government may borrow.
On January 19, 2023, the U.S. government officially hit the debt ceiling of $31.4 trillion. U.S. Treasury Secretary Yellen immediately implemented extraordinary measures to prevent the United States from defaulting such as suspending any new investments of retirement funds from government employees. The debt ceiling has been modified 20 times since 2002.
However, raising the debt limit could be much more difficult than on previous occasions. Republicans are demanding dramatic cuts to future spending in exchange for increasing the debt ceiling. On April 19 House Republicans put forward the “Limit, Save, Grow, Act”, a 320-page bill that would raise the debt limit by $1.5 trillion through the end of March 2024. According to McCarthy the plan includes $4.5 trillion in savings through cutbacks.
President Biden responded to the legislation by saying, “Folks, it’s the same old trickle-down dressed up in MAGA clothing. Only worse.” The president added that the cuts target programs that “millions of working-and middle-class Americans count on” while “separately pushing more tax giveaways” that benefit corporations and the wealthy.
The divide is setting up the potential for an 11th-hour showdown. More alarming is the X-Date could occur sooner than previously anticipated. This is because 2022 tax returns are 29% below the tax revenue of prior year. Analysts believe this date could come in early August or potentially as soon as late July. Research strategist at BofA Global Research expects to hear guidance from Secretary Yellen in the next two weeks about the actual day (X-date) when the government can’t meet its obligations.
The uncertainty of a government default has been highly supportive of gold futures pricing which remains above $2000. As of 5:55 PM EST gold futures basis most active June 2023 contract is up $7.40 or 0.37% and fixed at $2007.20.
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.
The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.
The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.
Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.
Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.
Overall manufacturing sales in constant dollars fell 0.8 per cent in August.
This report by The Canadian Press was first published Oct. 16, 2024.
