TAMPA,
Fla., July 31, 2024 /PRNewswire/ -- In a new
research paper, DoubleLine Macro Asset Allocation Analyst
Ryan Kimmel updates his 2023 outlook
on the possible trajectories of the U.S. budget deficit and debt
spirals toward theoretical crisis levels under different interest
rate scenarios.
The research paper, "U.S. Debt Spiral Briefing: A Scenario
Survey as Washington Drifts Toward a Reckoning," can be accessed
here:
https://doubleline.com/wp-content/uploads/Debt-Spiral-Briefing_Kimmel_July-2024.pdf
Among emerging risks identified in the briefing, Mr. Kimmel
notes that, since 2016, federal deficit spending have broken its
decades along pattern of shrinking to more manageable levels during
economic expansions after expanding to stimulate the economy during
recessions. "Not only do large deficits during growth periods
reflect a troubling trend of government spending outpacing revenue
generation," he writes, "their persistence raises the danger of
much deeper debt-funded deficits in the next and future
recessions."
Figures in asset management and banking have issued warnings
before about Washington's deficit
and debt spirals. This year, Mr. Kimmel points out in his paper,
major public institutions – namely, the Congressional Budget Office
and International Monetary Fund – now have issued cautionary
statements on the sustainability of the U.S. government's fiscal
path.
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SOURCE DoubleLine