The US national debt could skyrocket by a whopping $20 trillion over the next decade, according to a note from the Bank of America (BoA) citing data from the Congressional Budget Office (CBO). The forecast comes as the current outstanding public debt already amounts to approximately $33.6 trillion, with expectations that it could continue to grow significantly over the next 10 years due to “fiscal excess in the 2020s.”
At the current pace, the debt is projected to increase by $5.2 billion daily, reaching around $54 trillion by 2033. BoA pointed to various factors that could contribute to this surge in debt, including a sharp increase in the federal deficit, which has jumped by $320 billion to $1.7 trillion this year. This has forced the Treasury Department to sell trillions of dollars worth of fresh bonds, leading to a rise in annual interest payments and widening deficits.
Bank of America investment strategist Michael Hartnett highlighted the startling comparison that the US public debt is currently more than the combined GDPs of China, Japan, Germany, and India. Despite warnings about the repercussions of such massive debt levels, the forecast suggests that Washington is unlikely to halt its borrowing any time soon, given that loan acquisition is viewed as a way to fuel economic growth and circulate money.
Hartnett also warned that central banks may intervene by bailing out governments through measures like quantitative easing and yield curve control. This projection by the BoA comes at a time when the US recently exceeded its debt ceiling, which was legally set at $31.4 trillion, in January 2023.
After months of warnings about a potential default from the US Treasury, President Joe Biden signed a bipartisan debt bill in June, allowing the limit to be lifted until January 2025. This effectively gave the government the green light to continue borrowing without limits through next year. In less than two weeks after the bill was approved, debt spiked to $32 trillion, and it has been piling up ever since.
The rise in national debt represents a major economic concern for the US and could have long-lasting implications for the country’s financial stability. As the government continues to grapple with the economic fallout of the Covid-19 pandemic, finding a sustainable solution to manage this increasing debt burden will be crucial in ensuring a stable and resilient economy moving forward.