Icarus flew too close to the sun and the United States’ fascination with debt may prove to be equally destructive. Yesterday the CBO published its long-term Debt-to-GDP estimates. Those figures show U.S. debt steadily increasing as a percentage of GDP ramping-up to 195% of GDP by 2050. If debt-funded stimulus, zero interest rates and expansionary monetary policies will be the default response to every hiccup the U.S. economy encounters we may hit the 195% mark well before 2050 – especially when one considers anemic GDP growth. We estimate 1% long-term annual Real GDP growth once the U.S. economy normalizes post-COVID.
The full CBO study may be accessed here: https://www.cbo.gov/publication/56598#_idTextAnchor003