The new year has started off with some significant economic news, as the US national debt has surpassed $34 trillion for the first time. This alarming figure, revealed by the Treasury Department, marks a steep rise from the $1 trillion mark crossed in 1982. The nation’s debt is the total amount the federal government has borrowed to cover incurred expenses, often through marketable securities such as Treasury bonds and notes. The debt pile had already exceeded $30 trillion in 2022.
This record-breaking national debt has raised concerns among economists, who predict some concerning downturns in the economy. Acclaimed economist David Rosenberg has even issued a warning about a potential economic downturn in 2024, which he believes could destabilize the stock market. Rosenberg compares the current situation to the unexpected recessions of 2007 and 2000, cautioning against quick dismissal of a downturn just because it hasn’t happened yet.
Former Treasury Secretary Larry Summers has also voiced concerns over the economic policies likely to be pursued by the frontrunners in the upcoming presidential race. While he believes that a second term for President Joe Biden would likely see a continuation of a Keynesian approach to economic management, he termed a Trump 2.0 scenario as “very threatening” to the US economy. Summers suggests that history would judge those who go along with the subversion of American democracy very badly.
In addition to the national debt and concerns over economic policies, the US manufacturing sector has continued to face challenges. It contracted for the 14th consecutive month in December, marking the longest slump for the sector since 2000-2001. However, some areas show signs of stabilization, suggesting the rate of decline may be slowing.
US office buildings are also bracing for a significant debt cliff, with $117 billion at risk. Diversified real estate investments in the country’s top markets could be a potential solution for this looming crisis.
It is clear that the economic landscape is shaping up to be just as unpredictable as the political landscape. As the new year unfolds, it will be interesting to see how these economic challenges are addressed and what impact they will have on the overall state of the US economy.
