Mounting Interest Charges Set To Leave US 'Drowning In Debt' For 30 Years, Says Analyst

The U.S. government could be “drowning in debt” over the next few decades, warns Renaissance Macro Research, Business Insider reports.

“CBO 30-year projection is bleak,” analyst Stephen Pavlick said in a note on Friday. “Rising debt + rising interest costs – debt servicing cost disaster.”

Renaissance Macro points to Congressional Budget Office projections, which predict the federal debt-to-GDP ratio could nearly double from 98% in 2023 to 181% in 2053. An alternative scenario by the Committee for a Responsible Federal Budget suggests an even higher ratio of 222% by 2053.

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With interest rates being raised aggressively to control inflation, the cost of borrowing for debt holders has increased. The government’s debt servicing costs hit $475 billion in 2022, a 35% increase from 2021, and are expected to rise to $663 billion this year.

Rising debt servicing costs could lead to a “prolonged period of austerity,” potentially impacting the economy and corporate profits. This comes at a time when high rates are tightening financial conditions and raising the risk of recession.

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