The US economy is currently undergoing a serious economic crunch. With rising debt metrics and numbers, the United States could soon undergo a stark financial crisis, which can destabilize the nation for the long haul.
In a new development, a preliminary analysis done by CBO has predicted new findings. The analysts shared that the US debt-to-GDP ratio is set to increase by nearly 130% by 2033, which can further intensify the economy’s existing turmoil.
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Where is the US Headed?
Referring to the latest findings by US CBO Kobeissi Letter, a research handle on X, shared how the US debt-to-GDP ratio will cross 130% by 2033.
The debt-to-GDP ratio simply refers to a metric that compares a country’s public debt with its gross domestic product. Per a World Bank study, the debt-to-GDP metrics should stay within the 77% bar for the economies to thrive and maintain equilibrium.
The new shocking CBO projections entail that the US is borrowing resources at an alarming rate while its GDP, or the ability to pay loans, is currently slow as compared to its rapid borrowing habits.
“According to the US CBO itself, debt-to-GDP in the US is on track to hit 130% for the first time by 2033. In 2007, debt-to-GDP in the US was just 60%, and it has quickly doubled since then. Currently, debt-to-GDP is at ~124%, which is higher than the peak of World War II at 119%. Since 2020, debt-to-GDP has been up a whopping 20% after the government’s massive borrowing spree. Simply put, this is unsustainable.”
Bond Market Collapse Is Nigh, Says CBO
In an interview with the Financial Times, CBO director Philip Swagel emphasized how the rising debt metrics could trigger a possible bond market collapse within the US economy.
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“But as higher interest rates raise the cost of paying its creditors, on track to reach $1 trillion per year in 2026, bond markets could “snap back,” Swagel said.
The destabilization can further add chaos to the existing US economic regime, leading the space to battle serious monetary restraints and woes.