Fiscal Follies

The federal budget deficit is far higher than typical during economic expansions—and current estimates are likely too low. The deficit is unlikely to shrink anytime soon absent a debt crisis, and it’s increasing the supply of US Treasuries to the point of rivaling demand. The Treasury Department’s newly adopted debt issuance strategy is tenuous and could lead to more market volatility. … It’s not all doom and gloom: Treasuries are buoyed by the US dollar's reserve currency status. Strong productivity in our Roaring 2020s scenario can keep the debt load manageable as well. No crisis looms.