The non-partisan Congressional Budget Office warned that by 2051, US debt would rise to 202 percent of its gross domestic product, up from 102 percent this year.
US federal debt will grow to more than double the size of the economy over three decades, which will increase the risk of a fiscal crisis, although the dangers in the short term seem low, Congress’s budget office said.
The impartial arm of the legislature on Thursday in its long-term budget outlook equated to the debt of 202% of gross domestic product by 2051 versus 102% this year. The forecast for 195% in 2050 was unchanged from the previous report, the forecasts of which stretched in that year.
Net interest payments on debt are expected to remain relatively low for the next decade and then rise rapidly over the next 20 years, the CBO said. The agency projects the treasury yield of ten years after inflation at 2.6% in 2050. The nominal yield was 1.54% on Thursday, almost the highest in more than a year.
The CBO also said the two funds for social security, for the elderly and people with disabilities, would be depleted later than the agency predicted last year.
The report, which does not reflect the $ 1.9 trillion stimulus plan currently working through Congress, follows the sale in the treasury last week that boosted yields. Investors are gaining more confidence that rates will rise, with US growth and the labor market predicting a stronger-than-expected rise as vaccines roll out and states lift restrictions.
The CBO’s debt predictions are likely to support Republicans’ strong opposition to the relief plan, and may affect some Democratic lawmakers as President Joe Biden draws up a multi-million dollar succession plan to build infrastructure and boost the economy in other ways.
“The risk of a fiscal crisis appears to be low in the short term despite the higher deficits and debt due to the pandemic,” the CBO said in the report. “Nevertheless, the much higher debt over time will 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 tightens it, stressing that the low-inflation world of the past few decades is unlikely to change. .