The non-partisan Congressional Budget Office warned that by 2051, the U.S. debt would reach 202 percent of its gross domestic product, up from 102 percent this year.
U.S. federal debt will grow by more than double the size of the economy in three decades, increasing the risk of a budget crisis even though dangers appear low in the near term, the Congressional Budget Office said.
Debt will equal 202% of gross domestic product by 2051 from 102% this year, the non-partisan arm of the legislature said in its long-term budget outlook on Thursday. Its 195% projection in 2050 remained unchanged from the previous report, which forecast was for that year.
Net interest payments on debt are expected to remain relatively low over the next decade and then increase rapidly over the next 20 years, the CBO said. The agency projects a 10-year Treasury yield, after inflation, at 2.6% in 2050. The nominal yield was at 1.54%, near the highest in more than a year, Thursday.
The CBO also said the two Social Security trust funds, for the elderly and the disabled, will run out later than the agency planned last year.
The report – which does not reflect the $ 1.9 trillion stimulus package currently underway in Congress – follows the sale of Treasuries over the past week that pushed yields higher. Investors are increasingly convinced rates will rise, with U.S. growth and the labor market poised to rise more than expected as vaccines roll out and states lift restrictions.
The CBO’s debt projections are likely to support Republicans’ already firm opposition to the bailout plan, and may also worry some Democratic lawmakers as President Joe Biden prepares a multibillion-dollar follow-up plan to build infrastructure and boost economy by other means.
“The risk of a budget crisis appears to be low in the near term despite the higher deficits and debt resulting from the pandemic,” the CBO said in the report. “Nonetheless, much higher debt over time would increase the risk of a budget crisis in the years to come.”
Federal Reserve Chairman Jerome Powell said on Thursday that the US economy still has a long way to go before the central bank considers tightening, and stressed that the low-inflation world of recent decades is unlikely to change. not.