Share:

A recent opinion piece in Bloomberg highlighted that the latest budget deal successfully suspended the debt ceiling, averting a potential debt default. However, it also pointed out that this measure does little to address the United States’ long-term fiscal challenges, as US deficits continue to accelerate.

Escalating US debts

According to the Congressional Budget Office, the US is projected to have deficits exceeding 5% of its Gross Domestic Product, for an extended period. In the next decade alone, the country’s total debt is expected to reach approximately $20 trillion. Despite the recent agreement, this reduction is a mere $1.5 trillion. The debt-to-GDP ratio, which compares the US debt to its income, will continue to rise and is estimated to reach around 115% by 2033, with further increases projected beyond that. By the middle of the century, US debt could potentially approach 200% of the public debt-to-GDP ratio.

Chart

Concerns and projections

The aforementioned Bloomberg article highlights that these projections are somewhat optimistic, as they do not account for potential events like another global financial crisis or urgent needs for investment due to factors such as global warming. These factors could significantly impact the US debt landscape and necessitate additional financial measures.

Where does that put the US in the G20 rankings?

Among G20 nations, the United States currently holds the second-highest debt-to-GDP ratio, second only to Japan. However, it is crucial to note that Japan’s ratio stands at a significant 264%, making it an outlier in this regard. Japan has managed to finance its debt due to its large domestic investor base, strong savings culture, and intervention by the Bank of Japan in the bond market. Nevertheless, the long-term sustainability of Japan’s debt remains a concern.

Chart

The larger the US debt becomes, the more and more concerns there will be surrounding how that debt is managed. Expect this to become more and more of a focus in US politics moving forward, but for now, there is no immediate danger for the US from its high debt-to-GDP ratio.


Learn more about HYCM

Share: Feed news

High-Risk Investment Warning: Contracts for Difference (‘CFDs’) are complex financial products that are traded on margin. Trading CFDs carries a high degree of risk. It is possible to lose all your capital. These products may not be suitable for everyone and you should ensure that you understand the risks involved. Seek independent expert advice if necessary and speculate only with funds that you can afford to lose. Please think carefully whether such trading suits you, taking into consideration all the relevant circumstances as well as your personal resources. We do not recommend clients posting their entire account balance to meet margin requirements. Clients can minimise their level of exposure by requesting a change in leverage limit. For more information please refer to HYCM’s Risk Disclosure. *Any opinions made in this material are personal to the author and do not reflect the opinions of HYCM. This material is considered a marketing communication and should not be construed as containing investment advice or an investment recommendation, or an offer of or solicitation for any transactions in financial instruments. Past performance is not a guarantee of or prediction of future performance. HYCM does not take into account your personal investment objectives or financial situation. HYCM makes no representation and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast, or other information supplied by an employee of HYCM, a third party, or otherwise. Without the approval of HYCM, reproduction or redistribution of this information isn’t permitted.

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content


Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content

Editors’ Picks

EUR/USD hits fresh daily lows under 1.0500

EUR/USD hits fresh daily lows under 1.0500

EUR/USD continued to face downward pressure and matched last week's low at 1.0487. It is hovering around 1.0500, as the US Dollar remains strong, supported by higher Treasury yields. The 10-year Treasury yield reached 4.70%, a level not seen since 2007.

EUR/USD News

GBP/USD drops to six-month lows, eyes 1.2100

GBP/USD drops to six-month lows, eyes 1.2100

GBP/USD retreated further and dropped to 1.2107, hitting the lowest since mid-April. The pair remains under pressure amid higher US Treasury yields, following better-than-expected ISM September Manufacturing PMI data.

GBP/USD News

Gold approaches $1,800 as demand for the USD prevails Premium

Gold approaches $1,800 as demand for the USD prevails

Spot Gold fell to a fresh multi-month low of $1,827.11 a troy ounce on Monday amid resurgent  US Dollar demand. The Greenback suffered a minor setback at the beginning of the week, as generally encouraging Chinese data and upbeat United States (US) news underpinned the mood.

Gold News

Three altcoins that have kickstarted Q4 rally: LINK, RDNT, FLOKI

Three altcoins that have kickstarted Q4 rally: LINK, RDNT, FLOKI

Crypto market volatility seems to be making a comeback with the start of 2023’s fourth quarter , and some altcoins are already making headway. Chainlink (LINK), Radiant Capital (RDNT) and Floki Inu (FLOKI) are some cryptos that are showing aggressive upside moves. 

Read more

NIO contracts 2% as Tesla delivery decline weighs on EV sector

NIO contracts 2% as Tesla delivery decline weighs on EV sector

Nio (NIO) stock dropped 2.3% on Monday morning despite meeting its quarterly delivery target for the third quarter. Tesla's (TSLA) Q3 production and delivery decline is the culprit.

Read more

Majors

Cryptocurrencies

Signatures