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| The US economy is facing high debt risks. (Source: FAF) |
The CBO warns that if current laws remain unchanged, US federal government debt will increase from 98% of GDP this year to 107% in 2029 and 181% in 2053.
“Such high and rising debt would slow economic growth, increase interest costs for foreign creditors of the United States, and pose significant risks to the economic and fiscal outlook,” the office wrote.
Public debt is the amount of money the treasury has borrowed from domestic and foreign investors to support government operations and meet basic obligations such as health care and social security programs.
As of December 2022, US public debt is at 78% of total federal debt.
Total US debt now stands at more than $32 trillion, after the government suspended the debt ceiling earlier this month to avoid default.
The US Federal Reserve (Fed) has carried out a series of interest rate hikes in recent months in an effort to curb the nation's worst inflation in decades.
The Fed's interest rate is now 5% to 5.25%, up from 0% at the start of 2022.
The CBO report predicts that the gap between spending and revenue will generally widen in the coming decades, reaching 10% of GDP by 2053.
Rising interest rates and primary deficits will cause borrowing costs to nearly triple relative to GDP over the next three decades, the office said.
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