(MENAFN) The Bank of America (BoA) has issued a warning, projecting a substantial increase in the United States' national debt over the next ten years. Drawing from data from the Congressional Budget Office, BoA's analysis points to an alarming scenario. Currently, the outstanding public debt stands at approximately USD33.6 trillion. However, the pace at which it is growing, driven by what BoA refers to as "fiscal excess in the 2020s," suggests that it could escalate by a staggering USD5.2 billion daily over the next decade. This trajectory would potentially propel the national debt to around USD54 trillion by the year 2033.
One of the key drivers behind this projected surge in debt is the sharp increase in the federal deficit. In the current year, the federal deficit has leaped by USD320 billion to reach USD1.7 trillion, necessitating the Treasury Department to issue trillions of dollars' worth of new bonds. The consequent rise in annual interest payments, fueled by soaring bond yields, is also exerting pressure on the federal budget and exacerbating deficits, as highlighted by the bank.
Bank of America's investment strategist, Michael Hartnett, underscored the magnitude of the US public debt, emphasizing that it now exceeds the combined Gross Domestic Products (GDPs) of significant economic powers, including China, Japan, Germany, and India. Hartnett acknowledged that even if measures were taken to contain the federal deficit, the US government was unlikely to halt its borrowing practices. Borrowing is perceived as a means to stimulate economic growth and facilitate the circulation of money.
Hartnett also raised the prospect of central banks potentially intervening to support governments in the coming years. This could involve implementing quantitative easing and introducing yield curve control measures as part of broader strategies to manage escalating debt levels. The forecast from Bank of America highlights the significant fiscal challenges facing the United States and underscores the need for a comprehensive approach to addressing the mounting national debt.
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