In a new note released on Tuesday, Bank of America (BoA) says that according to data from the Congressional Budget Office, the US national debt appears poised to surge by $20 million over the next decade.
The forecast predicts that currently, the outstanding debt amounts to about $33.6 trillion, however given its current pace of growth, and due to “fiscal excesses of the 2020s,” it will likely swell by $5.2 billion per day for the next decade, which would produce a total national debt of about $54 trillion by the year 2033.
In the note, BoA said that a major factor in the surge in the debt is the sudden growth of the federal deficit, which grew by $320 billion this year, reaching $1.7 trillion, and making the Treasury Department sell trillions in new bonds. The bank also noted that soaring bond yields have triggered a rise in annual interest payments, which is also weighing on the federal budget and increasing the national deficit.
Bank of America investment strategist Michael Hartnett wrote in the note, “US public debt is… more than the combined GDPs of China, Japan, Germany, and India.” However he noted that even if the federal deficit is eventually brought under control, Washington was unlikely to cease taking loans because it is assumed the borrowing will fuel economic growth and encourage the circulation of dollars.
Hartnett added, “Likely central banks may simply bail out governments in coming years via quantitative easing and the introduction of yield curve control.”
In January, the United States reached its debt ceiling, which had been set by law at $31.4 trillion. In June, after months of warnings, and wrangling over a potentially disastrous default should no debt ceiling deal be reached, President Joe Biden signed a bipartisan debt deal which would lift the limit on the debt ceiling until January of 2025. It will basically allow the government to borrow freely without limits all throughout 2024. Less than two weeks after the bill was approved, the national debt jumped to $32 trillion, and it has continued to grow at a record rate since then.
