Is the economy on thin ice? Our expert can explain

Is the bubble about to burst again on the country's economy?

A recent article by Bloomberg News paints a picture of what lies ahead - and the predictions look bleak at best.

The Congressional Budget Office warned in its latest projections that US federal government debt is on a path from 97% of GDP last year to 116% by 2034 — higher even than in World War II. The actual outlook is likely worse.

From tax revenue to defense spending and interest rates, the CBO forecasts released earlier this year are underpinned by rosy assumptions. Plug in the market’s current view on interest rates, and the debt-to-GDP ratio rises to 123% in 2034. Then assume — as most in Washington do — that ex-President Donald Trump’s tax cuts mainly stay in place, and the burden gets even higher.  

With uncertainty about so many of the variables, Bloomberg Economics has run a million simulations to assess the fragility of the debt outlook. In 88% of the simulations, the results show the debt-to-GDP ratio is on an unsustainable path — defined as an increase over the next decade.  April 01 - Bloomberg

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Professor Lee Branstetter is a research associate of the National Bureau of Economic Research and nonresident senior fellow at the Peterson Institute for International Economics.   He is available to speak with media about the economy - simply click on his icon now to arrange an interview today.