The head of the US Federal Reserve, Jerome Powell, is concerned about US debt, which has recently topped $21.9 trillion, according to US Treasury Department data.
“I’m very worried about it,” the Fed chief told participants of The Economic Club of Washington, DC on Thursday. “From the Fed’s standpoint, we’re really looking at a business cycle kind of length: that’s our frame of reference.”
Just one day before his statement, the overall US deficit was more than $21.93 trillion – $16 billion of which is owed by the public and $5.8 by intragovernmental holdings, US Treasury data showed as of January 9. Thus, the annual surge in 2018 topped $1 trillion.
“The long-run fiscal, nonsustainability of the US federal government isn’t really something that plays into the medium term that is relevant for our policy decisions,” Powell added. “It’s a long-run issue that we definitely need to face, and ultimately, will have no choice but to face.”
The head of the Federal Reserve also warned that while his department has no official projection on the current government shutdown, it can still have a damaging effect on the national economy. The shutdown, which affects about a quarter of the federal government, entered its 21st day on Friday, with still no consensus on $5.7 billion funding to build the border wall US President Donald Trump insists on.
“If we have an extended shutdown, I do think that would show up in the data pretty clearly,” Powell stated. He added the Fed will have “a less clear picture” on the state of the national economy as during the shutdown the government agencies will not be able to release some vital data, including retail sales and GDP figures.
Earlier, Powell’s predecessor as chair of the US Federal Reserve, Janet Yellen, warned that another financial crisis can hit the US due to ballooning corporate debt and regulatory impotence.
“I think things have improved, but then I think there are gigantic holes in the system… The tools that are available to deal with emerging problems are not great in the United States,” Yellen said in December.