Due to the impact of the COVID-19 epidemic, the U.S. government spending this fiscal year has risen
The U.S. Congressional Budget Office stated that due to the widespread impact of the COVID-19 on the economy, the government’s large-scale stimulus measures to relieve economic losses will increase the federal budget deficit this fiscal year to a record 3.3 trillion U.S. dollars, which is the budget of the previous year. The deficit is more than three times, equivalent to 16% of GDP, but slightly lower than the initial estimate of US$3.7 trillion in April. In addition, government expenditures this fiscal year are expected to rise to 6.6 trillion U.S. dollars. Facing such huge government expenditures, it is expected that the U.S. government can only use money printing and tax increases. These two dilemmas can be solved because tax increases may be possible. It will intensify the downward pressure on the economy, and printing money may conceal structural spending problems. As for the consequences, the market may gradually lose confidence in the dollar.
Gold prices fell slightly
The major US stock indexes closed sharply lower on Thursday, September 3, and set their biggest one-day decline since June. Investors dumped the technology sector that had soared before, and economic data highlighted the market’s concern that the economic recovery would be long and difficult. The rebound of the US dollar index was hindered and hit a one-week high at around 93.07. This put pressure on gold prices. Spot gold once fell to around 1922.11. However, the new crown epidemic and the sharp drop in European and American stock markets still provided some support for gold prices.
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