The growing interest expense on the expanding Public Debt is an albatross the U.S. Economy must bear at a time when Washington continues to run Trillion Dollar-plus fiscal deficits. This debt burden will consume an increasing percentage of Government revenue and will be a significant headwind to Real GDP growth for decades to come.
The passing of last week’s $1.7 Trillion fiscal omnibus spending bill only increases the debt burden and demonstrates that Washington insists on having its cake and eating it too.
The table below details the interest expense burden at various debt and interest rate levels and expresses those values as a percentage of Government revenue (i.e. “receipts”).
We are looking at a “no growth” decade for the U.S. economy and markets that will be essentially flat over the next 10 years.
Elevated debt levels, sticky price inflation and negligible Real GDP growth is representative of the economic stagflation we have discussed for two years.