2020-09-22 13:15:00
U.S. DEBT WILL TWICE
REUTERS - SEPTEMBER 22, 2020 - The coronavirus pandemic will darken the U.S. long-term fiscal outlook for decades to come, the Congressional Budget Office said on Monday, releasing new forecasts that show federal government debt in 2050 will be nearly twice U.S. economic output.
Without changes to tax and spending laws, the federal debt held by the public will reach 195% of GDP by 2050, the CBO said in its long-term budget outlook - a level approaching the current debt ratios of Japan and Greece.
The non-partisan congressional budget referee said its outlook had deteriorated significantly from a year ago, when it projected U.S. public debt in 2049 would be 144% of GDP. CBO projects federal debt at 98% by the end of 2020, compared with 79% in 2019 and 35% in 2007 before a major financial crisis.
The debt is being propelled by higher U.S. annual budget deficits driven by a slow recovery from a deep pandemic recession, higher interest costs to finance those deficits, and long-anticipated spending growth associated with an aging population on healthcare programs and Social Security.
CBO projects the 2020 deficit reaching 16% of GDP - the highest since the end of World War Two in 1945. While the share will fall for several years, it will begin rising sharply again by 2028.
By 2050, the annual deficit is projected at 12.6% of GDP as revenue growth falls far behind spending growth, CBO said.
The debt swells considerably after 2030, when the CBO assumes that interest rates rise significantly from historically low levels. The projections assume that the average real interest rate on benchmark 10-year Treasury notes would be 0.9% through 2030, then rise steadily, reaching 2.5% in 2050.
CBO director Philip Swagel said that the long-term U.S. fiscal path is unsustainable, putting long-term confidence in the dollar at risk.
"There is no set tipping point at which a fiscal crisis becomes likely or imminent, nor is there an identifiable point at which interest costs as a percentage of GDP become unsustainable," Swagel said in a statement. "But as the debt grows, the risks become greater."
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Earlier:
2020, September, 21, 11:55:00
U.S. CARRENT ACCOUNT DEFICIT $170.5 BLN
The U.S. current account deficit, which reflects the combined balances on trade in goods and services and income flows between U.S. residents and residents of other countries, widened by $59.0 billion, or 52.9 percent, to $170.5 billion in the second quarter of 2020
2020, September, 17, 16:45:00
U.S. GDP WILL DOWN 3.7%
Federal Reserve Board and Federal Open Market Committee release economic projections from the September 15-16 FOMC meeting
2020, September, 17, 16:40:00
U.S. FEDERAL FUNDS RATE 0.0 - 0.25%
The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent
2020, September, 7, 11:20:00
U.S. EMPLOYMENT UP BY 1.4 MLN
U.S. total nonfarm payroll employment rose by 1.4 million in August
2020, August, 28, 15:25:00
U.S. GDP DOWN 31.7%
U.S. real gross domestic product (GDP) decreased at an annual rate of 31.7 percent in the second quarter of 2020
2020, August, 28, 15:20:00
U.S. GDP WILL DOWN 6.6%
the U.S. financial system has been resilient in the face of the recent economic and financial shock.
2020, August, 26, 12:55:00
U.S. ECONOMY RECESSION
The U.S. economy slipped into recession in February. Gross domestic product contracted in the second quarter at its steepest pace in at least 73 years.
