US public debt to GDP ratio expected to reach 156% in 2055: Report

By Mucahithan Avcioglu

ISTANBUL (AA) - The US Congressional Budget Office (CBO) has projected that the US public debt to gross domestic product (GDP) ratio will reach 156% by 2055, according to a report released Thursday.

In the Long-Term Budget Outlook: 2025 to 2055 report, the CBO said that the debt-to-GDP ratio is expected to increase each year from 2025 to 2055.

The ratio is projected to rise to 107% by 2029, surpassing the historical peak seen just after World War II, and continue to climb to 156% by 2055 and will continue to increase thereafter.

"Mounting debt would slow economic growth, push up interest payments to foreign holders of U.S. debt, and pose significant risks to the fiscal and economic outlook; it could also cause lawmakers to feel constrained in their policy choices," the report said.

The total federal budget deficit is expected to average 6.3% of GDP over the next 30 years, more than 1.5 times the average of the past 50 years.

The deficit is projected to reach 7.3% of GDP by 2055, remaining large by historical standards.

Federal spending is expected to rise over the next 30 years, reaching 26.6% of GDP in 2055. This level of spending has only been exceeded during World War II and the COVID-19 pandemic.

"Rising interest costs; spending for the major health care programs, particularly Medicare; and spending for Social Security, especially over the next decade, drive that growth," it noted.

According to the report, revenues will also continue to increase in general, reaching 19.3% of GDP in 2055.

Real GDP growth, which has averaged 2.5% over the past 30 years, is expected to slow to an average of 1.6% annually from 2025 to 2055.

In 2025, US GDP is expected to grow by 2.1%, while the growth rate is estimated to drop to 1.4% by 2055.