Powell Warns of Unsustainable U.S. Debt Path Amid Crisis-Level Deficits at Full Employment

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Published Apr 16, 2025, 06:38 PM

Federal Reserve Chair Jerome Powell has expressed concerns about the U.S. federal debt, stating that it is on an unsustainable path despite not being at an unsustainable level currently. This statement was made during a recent Q&A session. Powell highlighted that running large deficits, including crisis-level deficits, during times of full employment is a significant issue that the country needs to address. He emphasized that discretionary spending is not the root of the problem, suggesting a need to focus on other areas of the federal budget. Additionally, Powell called for a bipartisan approach to reducing the deficit, indicating that addressing the largest components of the federal budget would be necessary. He also noted that the banking system remains resilient, but private credit requires monitoring, and urged the completion of Basel III regulations.

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