By
Bhushan Akolkar
April 17th, 2024
The U.S. Treasury Department announced its plans to borrow about $3 trillion this quarter. The money is being used in large part to support the economy in the wake of the coronavirus pandemic.
The United States Treasury Department stated on Monday that it plans to borrow a record-high $2.99 trillion in net marketable debt during the second fiscal quarter of 2020. The U.S. Treasury also noted that it expects to borrow another $677 billion in the third quarter of the fiscal year.
As per the statement:
“The increase in privately-held net marketable borrowing is primarily driven by the impact of the COVID-19 outbreak, including expenditures from new legislation to assist individuals and businesses, changes to tax receipts including the deferral of individual and business taxes from April – June until July, and an increase in the assumed end-of June Treasury cash balance.”
This ‘salvation package’ comes thanks to strong stimulus efforts Congress has passed to invigorate the country’s economy that has been brought to a certain dead-end amid social distancing efforts to stop the coronavirus spread. Allocations, therefore, have totaled more than $2 trillion, and at least one more package is expected in order to help the more than 30 million American citizens who have faced the unemployment wall as well as thousands of other businesses that have seen their revenue flow disappear.
Initial Jobless Claims Are Falling while U.S. Treasury Plans to Borrow $3T
Let’s just mention that the number of initial jobless claims in the United States came to 3,839,000 in the week ending April 24. That actually represents a certain fall of 603,000 from the previous week’s revised level. During the past two months, the U.S. recorded more than 30.3 million jobless claims.
The Treasury Department also decided to halt few borrowing programs for the Federal Reserve, which is leveling Treasury guarantees in programs that are focused at creating another $2.2 trillion in funding to businesses and households.
Since March 1, the national debt has grown by $1.5 trillion to $24.9 trillion, a 6.4% increase. The budget deficit through March, or the first six months of the fiscal year, totaled $744 billion, on its way to easily exceed the biggest shortfall in U.S. history.
Companies to Experience ‘Adoption Escalation’
Be it as it may, Federal Reserve Bank of Richmond President Tom Barkin stressed that American businesses should learn how to adapt their way of working as they begin reopening amid the coronavirus pandemic.
Barkin especially commented on the fact that companies must start moving larger pieces of their operations online or introduce self-checkouts. He said he expects food delivery, telehealth, online education and shopping all to experience an “adoption escalation” in the aftermath of the crisis.
He stated:
“It will be important to implement safe, reliable and affordable modifications to current practices. If we continue living in the shadow of this virus, job retraining will also need to be a focus — targeted toward the large number of low-end service workers displaced by this crisis.”
On the other hand, the Federal Reserve Bank of St. Louis President James Bullard said that a continued shutdown could severely “damage” the US economy.
Bullard went on to praise the actions of the Fed and the U.S. government but commented that the economy has to reopen in order to allow additional worsening of the impact of the current coronavirus crisis.
He said:
“We are okay for now, but if it goes on for too long, then too many other problems will arise and we are really at risk we won’t be able to recover at an appropriate pace.”
Bullard also commented that solutions need to be found as fast as possible because of the fact that the majority of the money that has been pumped into the economy was only focused on symptoms of the economic crisis.