Paul Tudor Jones: "The American economy is "on steroids", which is not sustainable"

The United States economy is "on steroids" as a result of the accelerated pace of borrowing and government spending, believes legendary investor Paul Tudor Jones, writes Business Insider.

The billionaire referred to the estimate of GDP growth in the first quarter of the year of 4.2%, according to the Atlanta Fed GDPNow (a tool for forecasting the evolution of the US economy). In his view, the increases in recent quarters have been supported by massive borrowing and Government spending, but the consequences will be felt soon.

"I think it's strong," Jones said of the economy in an interview on CNBC earlier this week, quoted by Insider. "Why wouldn't it be? We have a budget deficit of 6%-7% and we consume like crazy (...). We have an economy "on steroids" which is unsustainable".

Economists are increasingly alarmed by the rapid pace of US government spending, with the total balance of government debt reaching $34 trillion earlier this year. Jones was referring, in particular, to the comments of the chairman of the Federal Reserve, Jerome Powell, who, in an interview last Sunday, warned that the United States is on an "unsustainable fiscal path".

US debt dominated the news late last year amid turmoil in the Treasury market, but otherwise investors still don't seem overly concerned about the US debt balance. However, the impact of high deficit spending will be felt in the markets sooner or later, Jones believes.

"The only question is... when will this manifest itself in the markets?. It may be this year, it may be next year. Productivity could mask this so it could be another three or four years. But it is clear that we are on an unsustainable path," said the billionaire.

Debt will be one of the main themes that will define the economy in the coming years, believes Jones, who spoke of a "debt bomb" in the United States, resulting from "fiscal imprudence". In his opinion, the pressures that form on the background of government debt will be counterbalanced by the productivity gains generated by artificial intelligence, which the billionaire anticipates as "extraordinary" in the coming years, according to Business Insider.