Federal Debt Is Almost 140%Of GDP And Rising Fast

Federal debt as a % of GDP has more than doubled in the past 12 years largely in response to the 2008 financial crisis and 2020 recession. Tax cuts and a lack of discipline in government spending has also contributed to the deficits which drive debt growth.

The nearly vertical growth in debt depicted by the chart is expected to continue for some time as the current resurgence of the pandemic, and its aftermath will require a considerable fiscal stimulus to aid the economy to an eventual recovery.

This trend in debt creation is reflected throughout the global economy. It is our view that the next major financial crisis will occur when this growing mountain of debt must contend with rising interest rates later this decade. The consequences for investors are, and will, be considerable.

If you enjoyed this post, you’ll find the Global Investment Letter of value. To view free sample issues please visit: https://www.globalinvestmentletter.com/sample-issue/