Coronavirus Recession To Push U.S. Debt To Nearly Twice GDP By 2050 – CBO

The non-partisan congressional budget referee said its outlook had deteriorated significantly from a year ago, when it projected U.S. public debt in 2049 would be 144% of GDP. CBO projects federal debt at 98% by the end of 2020, compared with 79% in 2019 and 35% in 2007 before a major financial crisis.

The debt is being propelled by higher U.S. annual budget deficits driven by a slow recovery from a deep pandemic recession, higher interest costs to finance those deficits, and long-anticipated spending growth associated with an aging population on healthcare programs and Social Security.

CBO projects the 2020 deficit reaching 16% of GDP – the highest since the end of World War Two in 1945. While the share will fall for several years, it will begin rising sharply again by 2028.

The debt swells considerably after 2030, when the CBO assumes that interest rates rise significantly from historically low levels. The projections assume that the average real interest rate on benchmark 10-year Treasury notes would be 0.9% through 2030, then rise steadily, reaching 2.5% in 2050.