Moody's economist Mark Zandi warns: Conditions for a US economic crisis are forming, with debt-to-GDP ratio exceeding 100%.
Mark Zandi, chief economist at Moody's Analytics, stated in a recent podcast that the United States is facing an economic "reckoning day," with all necessary conditions forming. He pointed out that the US debt-to-GDP ratio surpassed 100% at the end of April for the first time since World War II; the annual budget deficit is as high as $2 trillion, and the national debt exceeded $40 trillion for the first time last week. Zandi believes that without an external shock, the US political system will struggle to resolve long-term fiscal issues, and a crisis triggered by high interest rates is almost inevitable. He mentioned that the 30-year US Treasury yield reached 5.17% on August 25, having touched its highest level since 2007 earlier this month at 5.3%. Hedge fund investor Stanley Druckenmiller also criticized the US Treasury's practice of repurchasing bonds to suppress interest rates as market manipulation.
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