US economic policy calendar for 2025

On January 2, the debt ceiling for the US federal government came back into force after being suspended since the summer of 2023. The maximum amount is now the volume of debt outstanding on January 1 ($36.1 trillion). This means that the government can only replace debt that has fallen due, but cannot take on any additional debt. This is a problem because revenues do not cover expenditures.

However, outstanding debt temporarily fell on January 2 because of the repayment of nonmarketable securities held by a special fund used to finance the health insurance. This provides the Treasury with a short-term financial breathing space that is expected to last to some time between January 14 and January 23, as Treasury Secretary Janet Yellen explained in a letter to Congress on December 27.

At some point during this period, the debt ceiling is likely to be reached. From then on, the Treasury will have to resort to “extraordinary measures”. In particular, the Treasury's account balance, which most recently stood at around $800 billion, would then be drawn down.

This money could last for a few months based on historic experience: in the last two years, the average budget deficit in February, March and May was just under $300 billion, while in April there was a $200 billion surplus due to a tax deadline on April 15. In total, a deficit of around $700 billion is therefore realistic up to and including May. In June, the point could therefore be reached at which the Treasury can no longer meet all its obligations. Of course, this is a rough calculation with a number of unknowns, and the actual “X date" could come sooner or later. But it is certainly an indication that Congress will have to either raise the debt ceiling or suspend it again by early summer. Otherwise, there is a risk of national bankruptcy with unforeseeable consequences for the financial markets and the economy at large.

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