Bank of America: "US government debt is on track to exceed $50 trillion by 2033"

The United States government debt is on track to exceed $50 trillion by 2033, according to a Bank of America report citing data from the Congressional Budget Office, writes Business Insider.

The outstanding US public debt currently stands at $33.6 trillion and is expected to rise by $20 trillion to $54 trillion over the next decade amid the "fiscal glut of the 2020s," a said Michael Hartnett, an investment strategist at Bank of America, according to the source.

"U.S. public debt is greater than the combined GDP of China, Japan, Germany and India," the strategist wrote, adding that the outstanding debt will increase by $5.2 billion each day, or $218 million per year. hour, for the next ten years.

The increase in debt coincided with a sharp increase in the federal deficit, which climbed by $320 billion to $1.7 trillion in 2023. This forced the United States Treasury to issue trillions of dollars worth of bonds. Added to this is the increase in annual interest payments caused by rising bond yields. Thus, these payments have an increasing weight in the federal budget and increase the deficits. In October, estimated annual interest payments exceeded one trillion dollars, writes Business Insider.

According to Bank of America, as long as policymakers in the United States borrow even more, increasing government debt, markets will be concerned about the risks associated with persistent inflation, bond defaults and currency devaluation. "Central banks could probably bail out governments in the coming years through quantitative easing and yield curve control, policies that would be negative for the US dollar," Hartnett said.

Another measure of US debt watched almost closely by economists is public debt, which although on a steep upward trend, looks "less daunting". At the end of fiscal year 2023, this amounts to $26.3 trillion, or 98% of estimated GDP. The Congressional Budget Office estimates that the debt held by the public will rise to 115% by 2033, writes Business Insider.

But even if interest rates fall and the federal deficit is kept within limits, the federal government will continue to borrow money. Thus, the debt of the United States will always increase, because this fuels economic growth and stimulates the circulation of money, according to the mentioned source.