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.

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