While the coronavirus pandemic resulted in heavy economic losses for many U.S. firms, the federal government’s fiscal response to the crisis was surprisingly effective, with the federal government deficit falling to less than 1 percent of gross domestic product (GDP) on April 15, 2020, the highest level since World War II. In addition, the U.S. government started a $2.2 trillion fiscal stimulus package, which was enacted into law by the U.S. Congress and signed by President Donald J. Trump, on March 27, 2020, and it is gradually increasing the federal government’s fiscal deficit and debt. This fiscal response was made possible in part by historically low interest rates on U.S. federal debt, which are approaching zero, and the federal government’s massive tax cut, which helped the deficit and debt to fall.
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