(Bloomberg) -- The federal government’s debt interest costs surged in the first two months of the fiscal year, in a shift that’s likely to get increasing political attention.
The Treasury Department on Monday reported that interest paid on public debt amounted to $103 billion over the past two months. That marks an 87% jump over October and November last year.
It’s a taste of what lies ahead after the Federal Reserve hiked its benchmark rate by almost 4 percentage points this year and is expected to lift it close to 5% in 2023, according to a Bloomberg survey.
Republicans, who are set to take control of the House in January, have already been warning they want to scale back discretionary spending. Democrats, by contrast, have sought to address the fiscal deficit through rolling back past tax cuts, along with raising new levies.
For November, the fiscal deficit, adjusted for calendar differences, rose by 20% compared with the same month a year before — and by 8% so far this fiscal year compared to last. The 2023 fiscal year began in October.
One trend helping restrain the deficit is smaller outlays from the Labor Department. Those were down $5 billion, or 66%, in October and November compared with the same period last year, due to falling unemployment payments, a Treasury official told reporters on a conference call. The US labor market so far has remained robust in the face of Fed tightening.
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