The Treasury said Monday it expects net marketable debt to total $425 billion in the fourth quarter, which would bring total debt issuance in 2018 to $1.338 trillion, compared with $546 billion in 2017. That would be the highest annual debt issuance since $1.586 trillion in 2010, when the U.S. economy was still crawling out of a recession.
The Treasury’s fourth-quarter borrowing estimate of $425 billion is $15 billion less than it estimated in July. That would be the most for any fourth quarter since 2008, at the height of the financial crisis, though the figures can be volatile from quarter to quarter. The Treasury also plans to borrow $356 billion in the first quarter of 2019, compared with $488 billion in the first quarter of 2018.
Rising federal budget deficits are boosting the Treasury’s borrowing and could restrain economic growth as the cost of credit also rises.
The Treasury said earlier this month the deficit grew 17% in the fiscal year that ended Sept. 30, amid higher spending and sluggish tax receipts, which a senior Treasury official attributed to changes from the tax overhaul enacted late last year.
The deficit is headed toward $1 trillion in the current fiscal year, the White House and Congressional Budget Office said. The Office of Management and Budget projects the government is likely to run trillion-dollar deficits for the next four years.
The rising supply of debt could push up the cost of borrowing as the government seeks to attract investors, though many factors affect rates, including Federal Reserve decisions, the inflation outlook and shifting investor appetite.