What’s happening: The Congressional Budget Office projected Wednesday that the federal debt could be bigger than the US gross domestic product for the fiscal year starting in October. It hasn’t passed that threshold since 1946.
The CBO also projected that the federal budget deficit will hit $3.3 trillion this year, more than triple the shortfall recorded in 2019. That would be the largest deficit as a percentage of GDP since 1945.
The backstory: The increase is mostly caused by the economic fallout from the pandemic, which is shrinking GDP as Congress spends trillions of dollars to help keep the economy afloat, my CNN colleague Katie Lobosco reports.
Lawmakers approved $3.7 trillion in spending earlier this year, sending out stimulus payments directly to American households, boosting unemployment benefits and expanding lending to small businesses.
Most investors aren’t worried, however. Traders continue to snap up US Treasuries, considered a safe haven investment. The Dow had its best day since July on Wednesday, while the S&P 500 and Nasdaq both touched new records.
Many economists argue that high levels of spending are necessary in this moment, and the interest rate environment means the risk is limited. Super low interest rates make servicing debt very cheap — and with rates likely to stay depressed for some time, the government has space to issue more as needed.
“Every sign shows we have more room to borrow now & the fragile recovery needs fiscal support,” tweeted Wendy Edelberg, former CBO chief economist.
Both Republicans and Democrats appear committed to another round of spending, though talks on the stimulus package have stalled. But budget hawks may resurface the debt issue in the months and years to come.
Remember: The United States is not an outlier, with other developed nations such as Germany and the United Kingdom spending massive amounts, too. France announced the details of a €100 billion ($118 billion) recovery plan on Thursday.
India bans more Chinese apps as tensions rise
Details, details: The country’s Ministry of Electronics and Information Technology announced Wednesday that it would block 118 additional apps that “are engaged in activities which [are] prejudicial to sovereignty and integrity of India, defense of India, security of state and public order.”
The list also includes Chinese search giant Baidu and Alipay, the mobile payment app from Ant Group, the financial affiliate of Jack Ma’s Alibaba.
India had already blocked use of TikTok, the short video phenomenon from ByteDance, and scores of other apps in recent months.
Watch this space: The decision to bar Tencent’s mobile game PlayerUnknown’s Battlegrounds, or PUBG, could be especially disruptive.
PUBG was the top mobile game by monthly active users in India last year, according to analytics firm AppAnnie.
China on Thursday said it firmly opposes the ban. India has “abused the concept of national security and adopted discriminatory restrictive measures against Chinese companies,” Gao Feng, spokesman for China’s Ministry of Commerce, said at a regularly scheduled press briefing.
The big picture: The moves are the latest sign that the relationship between India and China is fraying badly. The two countries, both nuclear powers, have been increasingly at odds since a deadly border clash in June.
That incident, which left 20 Indian soldiers dead, was followed by calls for calm and deescalation. But negotiations between Indian and Chinese officials failed to break ground, and the tensions have spilled over into the trading relationship, worth more than $80 billion.
On the radar: A Twitter account connected to Indian Prime Minister Narendra Modi appeared to have been hacked Thursday, prompting an investigation by the social media company. The apparent breach comes more than a month after a massive hack compromised some of the most prominent accounts on the platform, including held by Barack Obama and Elon Musk.
The stock market thinks Biden is going to beat Trump
The presidential election is only two months away and the stock market is soaring. In theory, that should bode well for President Donald Trump.
See here: A group of infrastructure, renewable energy, pro-globalization, health care and cannabis stocks are up more than 10% since early June, according to data from advisory firm Strategas shared with CNN Business.
The so-called Biden or “blue” list includes companies like Granite Construction, Tesla, First Solar and chip giant Broadcom.
Meanwhile, a group of oil and fossil fuel producers, big defense contractors and bank stocks tracked by Strategas that might do better under a second Trump term is down 9% in the past three months.
Is it definitive? Absolutely not. There are a lot of variables affecting stock prices at present, central bank policy and the pandemic chief among them. But the data provides an interesting look at how the sectors most vulnerable to the election are tracking as November nears.
Also today: Initial US jobless claims are expected to have dropped below 1 million again for the last full week of August. The data posts at 8:30 a.m. ET.
Coming tomorrow: The official US jobs report for August is the main event.