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Trump inherits a fiscal challenge


President Trump took oath Amid much fanfare and celebration, and went straight to work on Monday. He started with a federal hiring freeze and regulatory freeze as part of several executive orders, but controlling the US fiscal situation may prove more challenging.

“The biggest hurdle is probably the huge debt and the very bloated budget, which includes a lot of spending. This is money that hasn’t really been spent at this point but is still ready to go out. You know?” , promises of future spending. So that’s going to be very, very problematic,” EJ Antony, a research fellow at The Heritage Foundation, told Fox Business before Trump took office.

US President Donald Trump sings the second executive order during the inaugural parade inside Capital One Arena on the Inauguration Day of his second presidential term on January 20, 2025 in Washington, US. (Reuters/Carlos Barria/Reuters)

National debt — which measures how much the U.S. owes its creditors — is above $36 trillion and rising, as tracked by the U.S. Treasury Department.

President Trump’s major fiscal deadlines

As far as the budget is concerned, last Friday it was non-partisan Congressional Budget Office (CBO) released its latest 10-year budget and economic outlook, which showed that the federal government is on track to break the debt record set nearly 80 years ago.

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“From 2025 to 2035, increased spending on Social Security, Medicare and interest payments will increase the debt more than the increase in revenues,” CBO Director Philip Swagel told reporters.

The federal government is estimated to run $1.9 trillion budget deficit In fiscal year 2025. The deficit is projected to decline somewhat over the next two years before resuming growth. The short-term decline is linked to the expiration of parts of Trump’s 2017 Tax Cuts and Jobs Act, which expires at the end of this year. However, Trump’s Treasury pick, Scott Besant, is vowing not to let that happen. Besant is expected to go through the confirmation process.

Scott Besant vows to make 2017 tax cuts permanent

Scott Bessant, President Trump’s nominee to be Treasury Secretary, testifies during a Senate Finance Committee confirmation hearing at the Dirksen Building on Thursday, Jan. 16, 2025. (Tom Williams/CQ-Roll Call, Inc. via Getty Images/Getty Images)

“We have to make 2017 permanent tax cuts and implement the JOBS Act and new pro-growth policies to reduce the tax burden on American manufacturers, service workers and seniors,” Besant told the Senate Finance Committee at her confirmation hearing. “President Trump is a necessity in modern times. “To change our trade policy and stand up for American workers.”

US President Donald Trump reviews troops during his inauguration ceremony in Emancipation Hall of the US Capitol on January 20, 2025 in Washington, DC. (Greg Nash/Pool/AFP via Getty Images/Getty Images)

CBO’s analysis is based on current law, so changes in federal tax and spending policies could change those figures.

Another devil in disguise; The purpose of the Federal Reserve’s easing cycle is to combat inflation. Policymakers have cut rates three times in 2024, a 50-basis point cut, followed by two quarter-point cuts. Still, the 10-year Treasury yield, which sets rates for many lending metrics, including mortgage rates, remains above 4%. Mortgage rates have topped 7%, according to Freddie Mac, rising for the fifth consecutive week.

Investors celebrated the latest Consumer Price Index reading, which contained no surprises. The basic rate, which excludes volatile food and energy, rose 3.2% on an annual basis in December, less than economists’ expectations of 3.3%. Market participants expect no changes at the Fed’s first meeting of the year on January 29, according to CME’s FedWatch tool.

anchor Security Last Change Change %
BNO United States Brent Oil Fund – USD ACC 31.98 -0.20

-0.64%

uso United States Oil Fund – USD ACC 80.42 -0.68

-0.84%

gld SPDR Gold Shares Trust – USD ACC 254.38 +1.29

+0.51%

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Still, inflation remains a wild card. Nymex and Brent crude have gained more than 8% this year and gold is trading just below its all-time high of $2,788.50 an ounce.



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