7 Mar 2016
United States has its own fiscal challenges – Wells Fargo
Research Team at Wells Fargo, suggests that the federal government in the United States has its own set of fiscal challenges over the coming years.
Key Quotes
“Even if nominal GDP growth rebounds to 4.1 percent, average borrowing costs remain at only 1.5 percent and the primary deficit stays at 1.8 percent of GDP (i.e., the “best case” scenario) the debt-to-GDP ratio of the U.S. government would only fall marginally between now and 2030.
Although the primary deficit may edge lower in the next few years, more fiscal adjustment in the United States likely will be needed to bring about a meaningful decline in the government debt-to-GDP ratio. If GDP growth disappoints in coming years, then even more fiscal consolidation will be required to stabilize, let alone reduce, the debt-to-GDP ratio.”
Key Quotes
“Even if nominal GDP growth rebounds to 4.1 percent, average borrowing costs remain at only 1.5 percent and the primary deficit stays at 1.8 percent of GDP (i.e., the “best case” scenario) the debt-to-GDP ratio of the U.S. government would only fall marginally between now and 2030.
Although the primary deficit may edge lower in the next few years, more fiscal adjustment in the United States likely will be needed to bring about a meaningful decline in the government debt-to-GDP ratio. If GDP growth disappoints in coming years, then even more fiscal consolidation will be required to stabilize, let alone reduce, the debt-to-GDP ratio.”