The National Debt Might Actually Shrink This Quarter
The Debt

The National Debt Might Actually Shrink This Quarter

Reuters/Erin Scott

A surge of tax revenue is helping produce an unexpected fiscal event: The U.S. Treasury expects to pay down some of the national debt this quarter.

The Treasury had estimated that it would borrow about $66 billion between April and June, but thanks to strong tax receipts the Treasury now projects that it will pay down the debt by about $26 billion during the period – the first quarterly debt reduction in six years.  

Treasury officials cautioned, however, that the final results could be different, especially as the Federal Reserve contemplates selling a portion of its Treasury holdings, a move that could force the Treasury to increase its borrowing.

Still, the “estimate of a paydown in debt will come as a surprise to some on Wall Street,” says Bloomberg’s Liz McCormick, who notes that many banks were projecting net federal borrowing for the current quarter.