The nonpartisan Budget Office of Congress warned that by 2051 U.S. debt will soar to 202 percent of its gross domestic product, up from 102 percent this year.
U.S. federal debt will grow to double the size of the economy in three decades, increasing the risk of a fiscal crisis even though the dangers seem low in the short term, the Congressional Budget Office said.
Debt will be equivalent to 202% of gross domestic product in 2051 to 2051 of 102% this year, the non-partisan arm of the legislature said on Thursday in its long-term budget forecasts. Its projection for 195% in 2050 did not change with respect to the previous report, the forecasts of which were executed that year.
Net interest payments on debt are expected to remain relatively low over the next decade and increase rapidly over the next 20 years, the OBC said. The agency projects the Treasury yield to ten years, after inflation, at 2.6% in 2050. The nominal yield stood at 1.54%, almost the highest in more than a year, on Thursday.
The OBC also said the two Social Security trust funds, aimed at the elderly and people with disabilities, will run out later than planned by the agency last year.
The report, which does not reflect the $ 1.9 trillion stimulus plan that is currently being worked through Congress, follows the Treasury liquidation over the past week that produced an increase in yields. Investors are gaining more confidence that rates will rise, with U.S. growth and the job market set for a stronger-than-expected rise as vaccines develop and states lift restrictions.
Debt projections from the OBC’s outlook are likely to sustain Republicans ’already strong opposition to the relief plan and could also worry some Democratic lawmakers as President Joe Biden prepares a multimillion-dollar plan to build infrastructure and boost ‘economy in other ways.
“The risk of a fiscal crisis appears to be low in the short term despite higher pandemic deficits and debt,” the OBC said in the report. “However, much higher debt over time would increase the risk of a fiscal crisis in the coming years.”
Federal Reserve Chairman Jerome Powell said Thursday that the U.S. economy still has a long way to go before the central bank considers tightening and stressed that the low-inflation world is unlikely to change in recent years. decades.