The amount to be borrowed in the quarter is more than double what it borrowed for the whole of its last fiscal year – $1.28 trillion – according to Fox News. The US government has announced protection for businesses and their workers in the form of direct payments as well as the Paycheck Protection Program (PPP).
The PPP scheme is expected to protect between 60 million and 65 million jobs – around half of private sector jobs before the pandemic – and keep workers on payroll.
But the US has recorded “unprecedented” levels of unemployment insurance claims – 30 million between March 15 and April 25 – as a result of Covid-19 related business closures.
In a statement, the treasury department said: “The increase in privately-held net marketable borrowing is primarily driven by the impact of the Covid-19 outbreak, including expenditures from new legislation to assist individuals and businesses, changes to tax receipts including the deferral of individual and businesses taxes from April – June until July, and an increase in the assumed end-of-June Treasury cash balance.”
The US Treasury building in Washington, DC.
In addition to the $3 trillion in the second quarter, the department said it expects to borrow a further $677 billion in the third quarter.
For contrast, the treasury said it borrowed $477 billion in the first quarter.
In a statement, Assistant Secretary Michael Faulkender, said: “Prior to the pandemic, the US economy was performing very well.”
He said that private forecasters had predicted GDP growth of around 2 percent “for the next few years.”
Michael Faulkender issued a revealing statement on the current US economic situation.
However, due to the pandemic, GDP declined by 4.8 percent at an annual rate in the year’s first quarter.
In terms of public spending, Mr Faulkender said that purchases of durable goods, which includes cars, fell by 16.1 percent in the first quarter. By contrast, this had risen by 2.8 percent in the previous quarter.
And spending on services fell by 10.2 percent, due to a fall in demand for cinemas, bars and restaurants.
US unemployment could rise to its highest levels since World War II.
Regarding unemployment, Mr Faulkender said that the high level of unemployment insurance claims in April suggested the US could see unemployment rise to its highest level since World War II.
A report for unemployment in April 2020 is due to be released this Friday.
Fox News reports that US national debt has grown by $1.5 trillion since March 1 to a total of $24.9 trillion overall – an increase of 6.4 percent.
The US is not the only country set to borrow huge amount in an effort to cushion the blow of the Covid-19 pandemic on the economy.
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Last month, the UK government announced that it had extended its overdraft with the Bank of England, in a move that suggested it was preparing to borrow millions or billions to fund Covid-19 spending.
The amount usually held in this overdraft – known as the Ways and Means facility – is worth around £400 million.
But during the 2008 financial crisis, this was extended to nearly £20 billion.
Chancellor Rishi Sunak announced a £330 billion bailout package for UK businesses in March to help battle the Covid-19 pandemic.
Chancellor Rishi Sunak outlined the UK’s coronavirus spending package in March.
In addition, he scrapped business rates for a year and promised cash grants for shops, pubs, and other businesses.
And the Confederation of British Industry (CBI) has warned of a “race against time” to provide further aid to struggling UK businesses.
It called on the government to accelerate the delivery of financial support and claimed that smaller businesses are struggling to access loans.