What does the chart show? The red line shows the daily total US public debt (government debt held by the public and intragovernmental holdings) in trillions of dollars since January 2006. The black line shows the debt ceiling (the self-imposed limit on how much the government is allowed to borrow), also in trillions of dollars. The debt limit was temporarily suspended between February and May of this year, shown by the dotted black line.
Why is the chart interesting? Back in January, we reported that the US had roughly two months to extend the debt limit in some way. In February, it was temporarily suspended, before being set to the current debt level in May. Since May, the total public debt has been right at the limit (for possibly the longest period of time in recent history). However, government finances are now at a point where the debt ceiling must again be extended before 17th October, or the US will be forced to default on some of its debt for the first time. This would be an economic disaster, probably on a global scale. At the beginning of the year, we didn't doubt that the ceiling would be lifted. It will probably be lifted again. However, with all attention on the current budget stand-off, it is hard to feel so confident this time around.
The ERC Chart of the Week is updated every Wednesday.
CLASH OF THE TITANS
Although Q2 GDP growth remained unchanged at 0.7% after last week's revision, Q1 growth was revised up to 0.4% and Q4 was revised down to -0.3%, so there was plenty of movement in our Clash of the Titans economic prediction competition.
Our top five currently looks like this:
We are also very excited to announce the line-up for this year's Clash of the Titans event, supported by PwC, to be held on 10th December. You can read all about it, and book Early Bird tickets for just £15, on our website.
Wednesday 9th October
18:30 at the Royal Overseas League, London
Whose Theories Can Best Deliver Growth and Recovery in the UK:
Hayek or Keynes?
With Michael Kitson (Cambridge) representing Keynes,
and Guy Fraser-Sampson (Cass Business School) representing Hayek
There are only a handful of tickets remaining for this event, so please book quickly to avoid disappointment.
For tickets and more information visit the ERC website.
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