Jerome Powell warns that the nation is on an "unsustainable" fiscal path and calls for change

During an interview at the DealBook Summit - hosted by The New York Times, Federal Reserve Chairman Jerome Powell, expressed concern about the nation's growing fiscal deficit, which he described as "unsustainable." The statement comes shortly after the national debt reached an all-time high of more than $36 trillion.

The U.S. federal budget is on an unsustainable path. The debt is not at an unsustainable level, but the path is unsustainable, and we know we have to change that.

Powell was appointed to his post by former President and President-elect Donald Trump -in his previous term- and was ratified by President Joe Biden.

The economy must grow faster than the debt

Powell's concern coincides with the new Trump administration in which many Republicans in public office are looking for avenues on how to handlethe tax cuts proposed in his campaign. These include reductions in individual tax rates, limits on state and local tax deductions, and tax breaks for businesses.

Republican leaders, including House Speaker Mike Johnson, aim to implement and expand existing measures, such as creating a follow-up to the Tax Cuts and Jobs Act of 2017, but face internal resistance from a group of lawmakers.

Despite this, Powell emphasized the need to balance fiscal policies with economic growth:

"We don't need to pay down the debt. We don't need to balance the budget. We just need the economy to grow faster than the debt. And that's not happening. We're running very large budget deficits at a time of full employment and strong growth, so we need to address that, and we need to do it sooner or later, and sooner is better than later."