Hey everyone! Ever feel like your debts are piling up? Well, the U.S. knows the feeling! 🇺🇸 As of April 8, 2024, America's national debt skyrocketed to a jaw-dropping $34.6 trillion—that's about $102,976.19 for each person in the country! 😱
What's Going On?
According to the U.S. Congressional Budget Office (CBO), the debt-to-GDP ratio is expected to jump from 97% in 2023 to 107% by the end of 2029, surpassing the record set right after World War II. And the numbers keep climbing—116% by 2034 and a staggering 166% by 2054! 📈
Why the Massive Debt?
The spike is due to several factors: increased spending on social security, hefty interest payments, those big COVID-19 stimulus checks, and huge investment packages signed under the Biden administration. 💰 Meanwhile, tax cuts from the 2017 Tax Cut and Jobs Act are projected to reduce federal revenue by $1.8 trillion until 2027. 💸
'Unsustainable Path' Ahead 🚧
CBO Director Phillip Swagel sounded the alarm, warning that the U.S. could face a market shock similar to what the UK experienced during former Prime Minister Liz Truss's short tenure last fall. 😬 Although he says we're \"not there yet,\" the rising debt could lead to higher interest rates, creating a domino effect on the economy. 🔀
Bloomberg Economics ran one million simulations, and in 88% of them, the debt-to-GDP ratio is on an unsustainable path. Yikes! 🚨
Debt Could Crowd Out Investments 💼
As the national debt grows, so does the burden of interest payments. In 2023 alone, net interest payments hit $659 billion (2.4% of GDP), a 38% jump from 2022. By 2032, this could soar to $1.2 trillion, potentially becoming the largest federal spending category in the next three decades. 😲
This means less money for crucial public investments like infrastructure and education, which could slow down long-term economic growth. 🛑 Plus, higher interest rates make it costlier for businesses to borrow money. Companies might cut jobs, slash research budgets, and delay new projects. That leads to fewer opportunities and could even stir up political tensions. 😓
The cycle of increasing debt and interest payments might also make investors demand higher yields to offset risks, leading to a vicious spiral. 🔄
The Bottom Line
The mounting U.S. debt isn't just a number—it's a looming issue that could impact economies worldwide. It's a critical time for policymakers to address these challenges to prevent a potential economic shake-up. 🌐
Reference(s):
America's mounting debt sends shockwaves to U.S. and global markets
cgtn.com
