The U.S. is Doing Well… But…
This year, it appears the U.S. is looking good relative to other countries around the globe. However, there are some bothersome statistics we wanted to discuss.
A Tough Road Ahead
From a budget perspective, the U.S. is on track for a tough road ahead. The 2013 Federal deficit is 1.4 Trillion dollars. Now, that can be offset with both higher taxes and a higher GDP. The problem is, it’s hard to tax people a lot, and then expect the economy to grow.
What Do Debt to GDP Ratios Look Like?
With expectations for 2.5% growth in U.S. GDP, we will be looking a total debt of 18.1 Trillion and 16 Trillion in GDP. That equates to a 112% debt to GDP ratio.
Typically 90-100% is considered to be an inflection point. Meaning, it’s really hard to get out of that debt hole. It’s just like personal debt- but a lot bigger and unfortunately (or fortunately) mere mortals can’t just tax people. By comparison, Italy’s debt to GDP ratio is 117%. Source: Egan Jones
