{"id":67167,"date":"2024-04-04T12:20:19","date_gmt":"2024-04-04T17:20:19","guid":{"rendered":"https:\/\/olduvai.ca\/?p=67167"},"modified":"2024-04-04T12:20:19","modified_gmt":"2024-04-04T17:20:19","slug":"a-million-simulations-one-verdict-for-us-economy-debt-danger-ahead","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=67167","title":{"rendered":"A Million Simulations, One Verdict for US Economy: Debt Danger Ahead"},"content":{"rendered":"

A Million Simulations, One Verdict for US Economy: Debt Danger Ahead<\/b><\/a><\/h3>\n

Bloomberg Economics ran a million forecast simulations on the US debt outlook. 88% of them show borrowing on an unsustainable path.<\/strong><\/p>\n

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 \u2014 higher even than in World War II. The actual outlook is likely worse.<\/span><\/p>\n

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\u2019s current view on interest rates, and the debt-to-GDP ratio rises to 123% in 2034. Then assume \u2014 as most in Washington do \u2014 that ex-President Donald Trump\u2019s tax cuts mainly stay in place, and the burden gets even higher.<\/span><\/p>\n

Simulations Show Range of Uncertainty Around CBO’s Forecasts<\/b><\/p>\n

10th and 90th percentile results of a million scenarios<\/span><\/p>\n

\"\"<\/a><\/p>\n

Sources: Congressional Budget Office, Bloomberg Economics<\/span><\/p>\n

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 \u2014 defined as an increase over the next decade.<\/span><\/p>\n

The Biden administration says <\/span>its budget<\/span><\/a>, featuring a slew of tax hikes on corporations and wealthy Americans, will ensure fiscal sustainability and manageable debt-servicing costs.<\/span><\/p>\n

\u201cI do believe we need to reduce deficits and to stay on a fiscally sustainable path,\u201d Treasury Secretary Janet Yellen told lawmakers in February. Biden administration proposals offer \u201csubstantial deficit reduction that would continue to hold the level of interest expense at comfortable levels. But we would need to work together to try to achieve those savings,\u201d she said.<\/span><\/p>\n

Trouble is, delivering on such a plan will require action from a Congress that\u2019s bitterly divided on partisan lines.<\/span>
\n<\/span><\/i><\/p>\n

…click on the above link to read the rest of the article…<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

A Million Simulations, One Verdict for US Economy: Debt Danger Ahead Bloomberg Economics ran a million forecast simulations on the US debt outlook. 88% of them show borrowing on an unsustainable path. The Congressional Budget Office warned in its latest projections that US federal government debt is on a path from 97% of GDP last […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[34223,5752,1654,34225,195,34224,827,834],"class_list":["post-67167","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bhargavi-sakthivel","tag-bloomberg-news","tag-congressional-budget-office","tag-david-wilcox","tag-debt","tag-maeva-cousin","tag-united-states","tag-us"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/67167","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=67167"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/67167\/revisions"}],"predecessor-version":[{"id":67169,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/67167\/revisions\/67169"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=67167"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=67167"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=67167"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}