Tuesday, December 7, 2021

Monitoring the Impact of Growing Government Debt on the Fixed Income Market

The United States has experienced two meaningful increases in government debt issuance in the past 15 years. As the Global Financial Crisis hit its pinnacle (maybe better described as a nadir) in late 2008, total federal debt increased by $2.1 trillion, or 22%, from June 2008 to June 2009. More recently, U.S. debt increased $4.4 trillion, or 19%, for the one-year ending March 2021 (totaling $28 trillion) in response to the economic damage caused by the Coronavirus epidemic. The combination of these two events more than doubled outstanding federal debt from 60% of the country’s annual economic output to nearly 130%.
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