US fiscal deficit could reach WWII-era highs (8.8% of GDP) if interest rates remain elevated, pushing debt-to-GDP to 133% by 2036.
Macro & Markets ·
If US interest rates remain 150 basis points above Congressional Budget Office projections through 2036, federal deficits could accumulate an additional $6 trillion and push the debt-to-GDP ratio to 133%, the highest level outside of 2008 and 2020 since World War II. Even a more modest 50 basis point rate elevation above CBO forecasts would add roughly $2 trillion to deficits and raise the debt-to-GDP ratio to 124% by the same year. The 10-year Treasury yield recently traded around 5.30%, approximately 100 basis points above the CBO's average projected rate for the coming decade, suggesting sustained fiscal pressure under current market conditions.