Key Takeaways
- • Ray Dalio, founder of Bridgewater Associates, said in a CNBC interview with Sara Eisen that "We're going to have a debt crisis in this country," with the timing dependent on the supply-demand balance for U.S. Treasurys.
- • U.S. debt levels surpassed $33 trillion for the first time in September 2023, as lawmakers negotiated a spending bill ahead of the Oct. 1 deadline.
- • Dalio warned that a government shutdown could raise the perceived risk of U.S. debt, and that economic growth could fall to roughly zero, plus or minus 1% to 2%.
Summary
Bridgewater Associates founder Ray Dalio said the United States faces a debt crisis, according to an interview with CNBC's Sara Eisen that aired Thursday. Speaking at a fireside chat at the Managed Funds Association, Dalio described the U.S. fiscal situation as "risky" and said he is watching closely how quickly a crisis could unfold. "How fast it transpires, I think, is going to be a function of that supply-demand issue, so I'm watching that very closely," he said.
U.S. debt levels surpassed $33 trillion for the first time that month, according to the report, as lawmakers negotiated a federal spending bill ahead of the Oct. 1 deadline. Failure to reach an agreement could result in a government shutdown and raise the perceived risk of the country's debt. Per the U.S. Department of the Treasury, federal spending rose roughly 50% between fiscal 2019 and fiscal 2021, contributing to the ballooning debt load. Investors fear that interest rates may keep rising as the fiscal situation worsens, which could depress demand for Treasurys.
Dalio also pointed to economic headwinds beyond the level of debt. He said growth could fall to zero, give or take 1% or 2%, and predicted a "meaningful slowing of the economy."
U.S. debt levels surpassed $33 trillion for the first time that month, according to the report, as lawmakers negotiated a federal spending bill ahead of the Oct. 1 deadline. Failure to reach an agreement could result in a government shutdown and raise the perceived risk of the country's debt. Per the U.S. Department of the Treasury, federal spending rose roughly 50% between fiscal 2019 and fiscal 2021, contributing to the ballooning debt load. Investors fear that interest rates may keep rising as the fiscal situation worsens, which could depress demand for Treasurys.
Dalio also pointed to economic headwinds beyond the level of debt. He said growth could fall to zero, give or take 1% or 2%, and predicted a "meaningful slowing of the economy."
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.