Today's Business Headlines: 11/22/24
Whether you’re an over-educated egghead or a high school dropout, there’s a good chance your mind can be boggled by the dollar figures that surround the US debt.– yes, that’s trillion, with a “T” – looks like a very, very big number. Also consider that in 2020, the total was “only” $27 trillion. Debt fears Uncle Sam’s outstanding obligation of $35 trillion – yes, that’s trillion with a “T” – looks like a very, very big number.
And the rest? GDP is $29 trillion. With 2% inflation and 2.5% real economic growth, GDP grows 4.5%–or $1.3 trillion. Uncle Sam, in addition to the $700 billion inflation benefit, gets roughly $250 billion of that back in increased income tax. Subtract those two figures from, let’s say the high end of the US debt growth estimate of $1.7 trillion, and that leaves $550 billion in new debt.
We’re early in Uncle’s income catching up naturally from post-2020 inflation. It will — keeping Uncle’s debt servicing costs relative to its revenue below history’s highs—fully at or lower than the 1980s. Fact. We were ok then. We’ll be ok now.Another fact: If we really were approaching a true debt crisis, long-term interest rates would be already maybe twice where they are now…or nose-bleed higher. The bond market prices reality, not hyperbole.
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