The Blubber

Per Bloomberg

The outstanding US debt reached $384 billion in the first six months of 2023. This resulted in a 32% increase compared to the same period in 2022, as the federal government's budget deficit jumped by 63% over a year ago.

This reportedly meant that the budget deficit of the US government hit $1.1 trillion during the first half of the fiscal year. The report highlighted three different reasons that drove the debt to these levels.

• Education
• Health care benefits
• Debt interest payments

In March alone, the Treasury Department said the deficit was $378 billion. Medicare and Medicaid expenses reportedly resulted in the Department of Health and Human Services seeing an $843 billion outlay, equal to 5%, in the first half.

Due to Biden's loan forgiveness program, outlays from the Department of Education saw the most percentage increase in terms of outlays, reaching $124 billion in the first half. Other contributors to the billions in outlays were Silicon Valley Bank and Signature Bank.

The two banks alone reportedly caused the Federal Deposit Insurance Corp. payments of $29 billion to outlays in March alone.

In related news, the Fed staff have projected the United States to experience a mild recession starting later in 2023. Due to the banking turmoil, policymakers reportedly scaled back their expectations for interest-rate hikes in 2023.

It was also noted that there was a need to watch incoming data to understand how an anticipated credit crunch would slow the economy. Some officials reportedly called for flexibility when it came to upcoming decisions.

With an expected "mild recession" expected later this year, they expect that it would take two years for a recovery to happen. The officials judged the banking situation as a result of poor risk-management practices and that "the banking system remained sound and resilient."

See flow at unusualwhales.com/flow.

Other News:

• The US federal government’s budget deficit hit $1.1 trillion in the first half of the fiscal year, a 63% jump over a year ago
• Fed staff projected a mild recession starting later in 2023

Resources:

Bloomberg