06/06/10 Stockholm, Sweden – US debt continues surging higher and the chart below shows a likely outcome: debt will exceed GDP in as early as 2012. Yep, that’s fewer than two years from now.
From Bloomberg:
“…the government’s total debt [...] rose past $13 trillion for the first time this month. The amount owed will surpass GDP in 2012, based on forecasts by the International Monetary Fund. The lower panel shows U.S. annual GDP growth as tracked by the IMF, which projects the world’s largest economy to expand at a slower pace than the 3.2 percent average during the past five decades.”
One concern about the rising debt is what PIMCO’s Bill Gross refers to as “the debt super cycle trend.” It’s a situation where the US eventually increases interest rates but, without improved economic growth, it gets much harder to pay debt-related bills. The US may have lot more difficulty selling its debt, or servicing it, when the lines below cross.
You can click the chart below or follow this link to see a bigger version and read Bloomberg’s accompanying article. (Note that there are two tabs, “story” and “graphic.”)
Rocky Vega
Rocky Vega is publisher of The Daily Reckoning. Previously, he was founding publisher of UrbanTurf and RFID Update, which he operated from Brazil, Chile, and Puerto Rico, and associate publisher of FierceFinance. He specialized in direct marketing at MBI, facilitated MIT Sloan School of Management programs, and has been featured on CBS. Vega graduated with honors from Harvard University, where he was on the board of Let’s Go Publications and directed business programs involving McKinsey, Goldman Sachs, and Harvard Business School faculty. He is also enrolled at the Stockholm School of Economics.
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Rocky!
I don’t comment very much, but i’m drunk and upset at the Laker loss…
And i know that has nothing to do with anything except my need to vent…and so i say keep speaking, my brother. You got lots of fans out here who like what you have to say. Well…one person at least…excellent analysis as always.
I do not comment too much, but I’m worried about drug and Laker loss …
And I know for me … Vent and that’s why I am calling to say, my brother has to do with everything except the need to keep. A lot of fans out here that you want then you’ve got to say. Well at least one person … … Excellent analysis as usual.
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rothallen
Your chart of public debt is missing the years before 1993. Thought you might like to know.
Incidentally the debt vs GDP ratio rose a lot quicker between 1980 and 1992. So the lines would be closer for those years than the ones shown.
In other words, you conveniently forgot to include the rapid rise in the debt ratio during the Reagan-Bush years. I’m sure this was a simple oversight and you did not notice that the blue line was not as long as the red line before posting it.