Nine months into the fiscal year, the federal deficit has topped $1 trillion for the first time ever. The imbalance is intensifying fears about higher interest rates and inflation, and already pressuring the value of the dollar.
The Treasury Department says the deficit in June totaled $94.3 billion, pushing the total since the budget year started in October to nearly $1.1t. The deficit has been propelled by the huge sum the government has spent to combat the recession and financial crisis, combined with a steep decline in tax revenues. Paying for wars in Afghanistan and Iraq is also a major factor.
America's soaring deficits are making some foreign buyers of US debt uneasy, and this could make them reluctant lenders down the road.