TAMPA, Fla., July 31, 2024 -- 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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