Amazingly, Democrat governors only run 48% of U.S. states yet their states have 85% of all Coronavirus cases. It's no surprise that in an election year, each of them have been overly eager to shut down their state's economy over a virus less deadly than the flu. Although they deserve credit for saving many lives by preventing 100 car accident deaths per day, their actions are about to cause the Greatest Depression in U.S. history.
The most often repeated claim in Washington in recent days has been, "this is not the time to worry about deficits!" But if now isn't the time, when is it ever the time? Shouldn't Americans be concerned that even during our absolute best of times... we never came close to balancing the Federal budget with our smallest trailing twelve month deficit of the past decade being ($406 billion)? Even before this crisis, the U.S. budget deficit had already increased by 162.32% over the last four years to a current level of ($1.065 trillion).
NIA forecasts that over the next two months, the trailing twelve month U.S. budget deficit will surpass the financial crisis peak of ($1.478 trillion). The combination of stimulus check outlays and deferred tax receipts together with a large portion of the country being completely shut down... will cause the trailing twelve month U.S. budget deficit to explode to a new record high of ($1.655 trillion) in April 2020. This summer, NIA forecasts the trailing twelve month U.S. budget deficit to reach ($2.03 trillion), which at that point will equal (10.11%) of U.S. GDP. For comparison, the largest financial crisis budget deficit as a percentage of U.S. GDP was (10.09%).
The U.S. at the end of February 2020 had a budget deficit/GDP ratio of (4.88%) and this was likely the best print we will see for at least the next five years. We expect the Greatest Depression to peak in January 2022 with a deficit of ($3.128 trillion), which will be equal to (14.40%) of GDP. For many decades, each U.S. recession has caused Federal outlays as a percentage of GDP to trend upward to new record highs as Federal receipts as a percentage of GDP trend downward to new record lows.
The current national debt of $23.41 trillion is equal to 107.3% of U.S. GDP. Over the next three months, the U.S. national debt as a percentage of GDP is likely to explode to 122.07%! NIA projects for the U.S. to issue $921 billion in new debt between now and the end of May as U.S. GDP on an annualized basis simultaneously declines by $1.843 trillion! The U.S. debt/GDP ratio is now on track to reach 150% by August 2025!