Jerome Powell says $39 trillion national debt is ‘not unsustainable,’ but it ‘will not end well’
fortune.com • • business
Key Points:
- Federal Reserve Chair Jerome Powell warned that while the current U.S. debt level is manageable, the trajectory of debt growth is unsustainable and requires action soon to avoid negative outcomes.
- Powell emphasized the distinction between the stock of debt and its growth rate, noting that U.S. debt is increasing faster than the economy, which is the core issue threatening long-term fiscal sustainability.
- Interest payments on the national debt are rising sharply, projected to exceed $1 trillion by 2026, posing real budget constraints but not an immediate fiscal collapse.
- Powell suggested that achieving primary budget balance and fostering economic growth faster than debt growth is a feasible solution, though he acknowledged that fiscal policy is outside the Fed’s jurisdiction and political will is necessary.
- He reiterated the importance of Federal Reserve independence, cautioning against using monetary policy tools to address fiscal problems, and highlighted the complex trade-offs involved in addressing the national debt.
