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The US government budget deficit hit the highest level since the Covid pandemic years in 2024, fueled by increased debt interest costs and higher Social Security and defense costs – more than offset by increases in tax revenues, reports Bloomberg.

The deficit for the fiscal year that ended Sept. 30 hit $1.83 trillion, up from $1.7 trillion a year earlier and the largest on record except for fiscal years 2020 and 2021, Department of State data showed US Treasury released on Friday.

Treasury officials confirmed that the extension was largely due to consideration of the Biden administration’s student debt relief plan, which the Supreme Court reversed in mid-2023. Stripping out that effect and adjusting for calendar differences, the deficit shrank 4 percent, Treasury officials said Friday.

Large US budget deficit | Excluding pandemic years, the shortage is the largest in the nation’s history

However, the figures for both years exceeded 6% of gross domestic product, an unusually large burden outside of economic recessions or world wars. This year the ratio was 6.4%, up from 6.2% in 2023.

Social Security spending rose $103 billion, due to the increased number of beneficiaries combined with an increase in the cost of living. Defense increased by $50 billion.

Interest expense

Both divisions were less than the interest paid by the Treasury Department on the country’s huge debt. That spending increased $254 billion to $1.1 trillion for the year, an increase of 29%. At around 3.93% of GDP, this burden is the highest since 1998.

Revenue rose 11% in the fiscal year, boosted mainly by higher tax receipts. Strong gains in jobs and wages were a factor, along with tax receipts delayed from 2023 due to natural disasters, Treasury officials said.

The large deficit could complicate the spending plans of each candidate in next month’s presidential election. With Congress headed for a narrow partisan divide, decisions loom in 2025 about what to do with the tax cuts enacted during the Trump administration in 2017 and cap reform in debt.

Treasury Secretary Janet Yellen said in a statement accompanying the budget data that the Biden administration’s budget proposals would reduce the deficit by $3 trillion over time, in part by raising taxes on corporations and the poorest Americans. rich

Most economists expect the debt to continue to grow under each presidential candidate. The Committee for a Responsible Federal Budget estimates that Kamala Harris’ economic plan would increase the debt by $3.5 trillion over ten years, while Donald Trump would increase it by $7.5 trillion.

The government may see some relief next year as the Fed begins to reduce borrowing costs. The weighted average interest rate on total debt outstanding at the end of September was 3.32%, at around 15-year highs, but down slightly from the previous month, the first decline in almost three years.

Madrid gave a deadline for their removal until October 25

China has taken measures in response to EU tariffs on electric car imports

Car manufacturers are preparing for a crisis

Electric scooter rental operators in Madrid, Spain have until October 25 to remove their mobility devices from the city’s streets, city hall said. This followed an outcry against reckless driving and chaotic parking by their users, Reuters wrote.

After revoking their licenses last month, the city hall said that the three foreign companies – Lime, Dott and Tier Mobility – had not hindered or controlled the movement of their customers on their parking lots to get their permits back.

Madrid, Amsterdam-based Dott, Germany-based Tier Mobility and US-based Lime, whose scooters are available through a mobile app, have around 2,000 vehicles.

The scooter-sharing system has sparked opposition in cities around the world due to users’ reckless driving on streets and sidewalks and careless parking, often ‘ leaving public spaces full of scooters.

Meanwhile, China hit back at the EU’s high prices on electric car imports, the BBC reported. After the EU slapped tariffs of up to 45% on imported Chinese electric cars, China slapped tariffs on branded imports from EU countries. According to France, this is a retaliatory measure for the large tariffs announced by the EU on Chinese electric cars.

The European Commission has said it will challenge China’s tariff at the World Trade Organization (WTO), saying it is a “gross abuse” of trade protection measures. China, however, said the move was intended to protect domestic manufacturers.

French brandy producers are concerned that the taxes, which will hit the most famous alcohol brands, will be “disastrous for the industry”. France accounts for 99% of brandy exports to China.

Share prices of branding companies fell after the China announcement. China announced the new restrictions on European brands just days after EU countries approved high prices on Chinese-made electric cars.

China’s Ministry of Commerce said brandy imports threatened to cause “significant damage” to its own producers. Importers must pay “security deposits” for​​​​ European branding. French Trade Minister Sophie Primas said the alcohol tax “appears to be a retaliatory measure” following the European Union’s decision to raise tariffs on Chinese electric cars. She also said such a retaliatory measure would be “unacceptable” and “totally against international trade rules,” adding that France would work with the European Union to take action at the WTO.

Car manufacturers in Europe are preparing for a deeper and longer crisis, writes the Financial Times. The sector, hit by weak sales, strong competition from China and declining demand for electric vehicles, is seeing signs of lower profits. Warnings of falling profits from companies such as Volkswagen and Stellantis are raising fears that European manufacturing will face a deeper and longer recession, the Financial Times reports.

At the beginning of 2024, after the supply chain disruptions caused by the Covid-19 pandemic are removed, the sector is expected to return to normal life and car production will increase by more than 2%. Instead, however, companies are facing problems in several areas, including strong competition from China, weak demand in Europe and a slow transition to electric vehicles.

“We all thought the situation would be normal, but it is getting worse. “Suddenly, the negative factors are accelerating, and the size of the decline is very large,” said Jefferies analyst, Philip Huchoa. The share of foreign brands in the Chinese car market for the first seven months of the year reached a low of 37%, compared to 64% in 2020.