U.S. Debt to Surpass GDP

Filed under: Forecasts, Market Matters, Economic Data, Federal Reserve, Financial Crisis

For the first time in history, U.S. government debt -- now $13 trillion -- will surpass GDP in 2012, based on forecasts by the International Monetary Fund. Bill Gross of PIMCO calls this a "debt super cycle."

The key problem with such a huge debt is that investors will demand a higher return, which translates into higher interest rates. The interest cost alone on $13 trillion will put an added burden on the government and the people.

Bill Gross further commented that "If real interest rates were ever to go up instead of down," our economic growth will not be enough to support borrowings.

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U.S. Debt to Surpass GDP originally appeared on BloggingStocks on Sat, 05 Jun 2010 11:40:00 EST. Please see our terms for use of feeds.

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International Monetary Fund - Gross domestic product - Government debt - Federal government of the United States - BloggingStocks

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