ACTV - What The U.S. Election Could Mean For Deficits Debt And The Yield Curve
2024-07-17 21:45:00 ET
Summary
- Government borrowing and the national debt are barely getting a mention in the US election campaign, yet a failure to change trajectory risks further debt downgrades, more market volatility and higher borrowing costs.
- This will pose economic headwinds, making it all the more challenging for the victor to achieve their manifesto goals.
- In the current environment, where markets are calm, politicians see little threat from the current trajectory of the US fiscal position.
By James Knightley | Dmitry Dolgin | Padhraic Garvey, CFA
Fiscal sustainability is being questioned
This year’s election is set against a backdrop where the government is borrowing the equivalent of 6% of GDP and the national debt totals $35tr. 24 years ago, the economy posted similar GDP growth rates to today and unemployment was also around the 4% mark, yet the US was running a fiscal surplus of 2% of GDP and debt stood at less than $6tr. The scale of deterioration in the US fiscal position is huge and failure to get to grips with the issue runs the risk of more debt downgrades, more market volatility, higher borrowing costs and slower potential economic growth....
What The U.S. Election Could Mean For Deficits, Debt And The Yield Curve