Photo: Stefani Reynolds/Getty Images

The federal budget deficit will reach $3.3 trillion in the fiscal year ending this month — more than triple the 2019 shortfall, the nonpartisan Congressional Budget Office (CBO) projected on Wednesday.

Why it matters: That would be 16% of GDP, the largest amount since the end of World War II in 1945. The national debt is projected to exceed 100% of GDP in 2021 and rise to 107% in 2023 — "the highest in the nation's history," the CBO notes.

Driving the news: The CBO attributed the rise mostly to the economic disruption caused by the coronavirus pandemic "and the enactment of legislation in response."

Our thought bubble, via Axios' Felix Salmon: The U.S. government can borrow at less than the rate of inflation, which is a sign from the markets that they’re encouraging higher government spending, higher borrowing and higher debt.

  • The Treasury will always be able to repay that debt, because it borrows in dollars and can print as many of those as it likes.

Of note: The deficit could have been worse. The CBO projected in April that it would jump to $3.7 trillion.

Go deeper

Dion Rabouin, author of Markets
20 hours ago - Economy & Business

Retail sales return to trend after coronavirus plunge

Data: U.S. Census Bureau; Chart: Axios Visuals

One of the few economic readings sporting a V-shaped recovery is U.S. retail sales, which showed the highest monthly gains in history in May (18.3%) and June (8.4%), and grew in August by 0.6%.

On one hand: While the reading showed a significant slowdown, total retail sales in August were higher than they were before the coronavirus pandemic hit the U.S., even when excluding food services.

Fed upgrades expectations for pandemic-hit economy

Jerome Powell testifies before Congress in June. (Photo: Tasos Katopodis/Pool/ AFP via Getty Images)

The Federal Reserve said Wednesday that the economy will shrink by 3.7% this year — a rosier outlook than the 6.5% contraction initially projected in June.

Why it matters: The economy is still wrecked by the coronavirus pandemic, but has rebounded faster than some anticipated. Signs still suggest the recovery could stall out. The August unemployment rate is already lower than where the Fed, in June, said it would be by year-end.

Updated 7 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Eniola Odetunde/Axios

  1. Global: Total confirmed cases as of 10 p.m. ET: 30,065,728 — Total deaths: 944,604— Total recoveries: 20,423,802Map
  2. U.S.: Total confirmed cases as of 10 p.m. ET: 6,674,070 — Total deaths: 197,615 — Total recoveries: 2,540,334 — Total tests: 90,710,730Map
  3. Politics: Former Pence aide says she plans to vote for Joe Biden, accusing Trump of costing lives in his coronavirus response.
  4. Health: Pew: 49% of Americans would not get COVID-19 vaccine if available today Pandemic may cause cancer uptick The risks of moving too fast on a vaccine — COVID-19 racial disparities extend to health coverage losses.
  5. Business: Retail sales return to pre-coronavirus trend.