Wharton professor Joao Gomes has expressed concern over the rapid growth of U.S. debt. He predicts that if Congress does not take immediate action, the U.S. could face a debt crisis by 2025.
What Happened: Gomes compared the situation with the UK’s 2022 financial crisis. He suggested the U.S. could meet a similar fate if the current fiscal trajectory is unchanged. Gomes discussed this in an interview with CNBC’s ‘Squawk Box’.
“That’s something that could definitely happen to us next year,” Gomes said.
The professor warned that rising interest rates make a default crisis in the U.S. within this century increasingly likely.
See Also: Historic S&P 500 Rally In Q1 Flashes Bullish Signals For 2024: ‘Only The Ninth Time Since 1940’
Gomes also pointed out the 2017 tax cuts, which expire next year, as a potential area of dispute. The future of this program is largely dependent on the upcoming presidential election, with neither candidate indicating specific plans to address the fiscal issue.
“I think we’ll have a serious debate next year about the tax cuts and whether to extend them or not,” he said. “And I think we just can’t afford them.”
Other experts, such as Responsible Federal Budget president Maya MacGuineas and Wall Street figures Jamie Dimon and Ken Griffin, have also expressed concern about the size of U.S. borrowing. They suggest a solution would require both tax increases and spending cuts.
Why It Matters: The U.S. national debt has been a growing concern for many. A study revealed that over 85% of Americans are deeply worried about the potential impact of the burgeoning national debt on their future.
Similarly, Bill Gross, co-founder of PIMCO, warned of a significant escalation in the U.S. debt crisis, comparing its future implications to climate change’s slow yet destructive effects.
As the national debt drama deepens, the U.S. government debt is reaching unsustainable levels, with the latest analysis pointing to an even more concerning future.
The debt has been increasing by nearly $8.5 billion per day over the past year, further emphasizing the situation’s urgency.
Read Next: US Manufacturing Activity Hits Highest Growth In 18 Months: ‘Clear Signs Of Improving Conditions’
Image Via Shutterstock
Engineered by Benzinga Neuro, Edited by Kaustubh Bagalkote
The GPT-4-based Benzinga Neuro content generation system exploits the extensive Benzinga Ecosystem, including native data, APIs, and more to create comprehensive and timely stories for you. Learn more.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
