The United States did it! Nearly three months after topping $35 trillion, the national debt crossed the $36 trillion milestone. Perhaps it's time to pop open a bit of bubbly, dance the Charleston, and run with elephants and donkeys like a scene out of Spain. Based on the forecasts from the Treasury Department, Uncle Sam could add another $1 trillion by early spring. Get in, future generations. It is time to swim in IOUs.
Got $36 Trillion?
According to the Treasury's Debt to the Penny dashboard, Washington surpassed the $36 trillion mark on Nov. 21 for the first time on record. To be exact, the national debt reached $36,034,994,586,981.9, up from $35,973,905,978,114.70 on Nov. 20. This means the national debt has surged more than $2 trillion since Jan. 2. It took America 200 years before registering its first $1 trillion of red ink; now it takes a few months.
What is comical is that the United States could add $100 billion by the time the country flips the calendar to December. Ouch.
Republicans and Democrats are not yet finished. Recent forecasts from non-partisan budget watchdog the Congressional Budget Office (CBO) suggest that the national debt is poised to be like a SpaceX rocket and ascend to $57 trillion in the next decade. If these projections are accurate, Washington has added $34 trillion since the coronavirus pandemic, or $8 billion per day.
The Kobeissi Letter, from a popular financial investment research firm, may have recently summarized the current situation the best on the social media platform X: "At the current pace, US debt could hit $40 trillion within the next 2 years. Calls for major spending cuts are growing, but not being acted on yet. We are on an unsustainable fiscal path."
That Inflation Is Sticky
All the October inflation reports have now been officially released, and they are not comforting heading into 2025. Put simply, the US economy could be stuck on a sticky inflation substance.
First, the October Consumer Price Index (CPI) report rose to 2.6%, up from 2.4% in September. Core CPI, which removes the volatile energy and food categories, remained at 3.3% for the second straight month. Second, the Producer Price Index (PPI) — a gauge of prices paid for goods and services by businesses — increased to a three-month high of 2.4%. Core PPI also climbed to a higher-than-expected 3.1%. Third, the Fed's preferred Personal Consumption Expenditure (PCE) Price Index jumped to 2.3%, and core PCE ticked up to 2.8%.
What has been going on? A few things. The Federal Reserve has been running the printing presses, expanding the money supply every month this year, hitting $21.3 trillion in October, the highest since December 2022. Services also have fueled price pressures, with a whole host of categories rising or remaining elevated, such as shelter, transportation, and medical. Finally, federal spending continues to hover around record levels.
As eminent economist Milton Friedman once said, "Inflation is made by government and no one else."
Ultimate Caffeine High
Consumers may not have noticed yet, but the coffee futures market has been rocketing this year, soaring 68% on the US ICE Futures exchange. The front-running coffee contract for Arabica, also known as the good stuff, climbed nearly 3% ahead of the Thanksgiving holiday. It touched $3.20 per pound during the Nov. 27 trading session, the highest level since 1972.
Disappointing crop prospects in Brazil have been the driving force behind Western Civilization's fuel spike. The South American nation suffered from dry weather that damaged its coffee-growing infrastructure earlier this year. But while Brazilian farmers are singing in the rain these days, the rainfall has come too late, and levels have been below average.
The European Union also is contributing to coffee's performance. The European Parliament is debating deforestation regulations, a new policy that would force companies to ensure they are not importing products that were manufactured or grown in deforested or degraded regions after 2020. If the EU follows through on this law, it could devastate coffee and cocoa.
So far, coffee’s gains have been slightly limited after International Coffee Organization (ICO) data show that global exports have risen 12% year-over-year from October to September.
Like a glass of orange juice or a piece of chocolate, that morning fix might be more expensive in 2025.
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