The U.S. national debt is on an unsustainable path, with 88% of it due to increase over the next decade. Bloomberg Economics analysts write that they reached this conclusion based on data from one million simulations Bloomberg .
The Congressional Budget Office (CBO) projects that the national debt-to-GDP ratio will rise from 97% last year to 116% by 2034, higher than World War II levels. But the actual forecast is likely to be even worse because of the CBO’s optimistic assumptions about tax revenues, defense spending and rates.
Given current market rate expectations, the US debt burden will reach 123% of GDP by 2034. And with the extension of Trump-era tax cuts, that number is expected to rise even further.
“Bloomberg computer simulations show the debt-to-GDP ratio of 88% is on track for unsustainable growth over the next decade,” the agency said in a release.
In the worst-case 5 percent of scenarios, the U.S. debt burden exceeds 139 percent of GDP in 2034; This is higher than that of crisis-plagued Italy a year ago. Against this backdrop, Treasury Secretary Janet Yellen acknowledged the risk of losing the ability to finance all planned spending “in extreme cases.”
Maintaining a sustainable debt path will require concerted action along party lines from a divided Congress. At the same time, neither the Republicans who control the House of Representatives nor the Democrats who control the Senate have yet proposed specific measures to optimize spending and taxes to reduce the budget deficit.
“After all, it may take a crisis—perhaps a collapse in the government bond market because of a downgrade in U.S. ratings, or a panic because Medicare and Social Security funds run out—to prompt action. This is playing with fire,” warns Bloomberg Economics.
Last summer was a miniature preview of how the crisis might begin. The newspaper writes that Fitch Ratings downgraded the US credit rating for two days in August and the increase in the US Treasury’s long-term debt issuance directed investors’ attention to risks.
“Bond hooligans forced the British government to cancel the plan and Truss to resign. For the United States, the dollar’s central role in international finance and its status as the dominant reserve currency makes such a collapse less likely. But if the confidence in Treasuries as a key safe-haven asset disappears, the erosion of the dollar’s position will be a turning point and the United States will lose not only its access to cheap financing but also its global power and prestige,” Bloomberg Economics said.
Before that, it was known that the dollar had a share in the foreign exchange reserves of different countries. fallen minimally.
Previously in UAE got worse GDP growth forecast.