Economist Olivier Blanchard Sounds Alarm On U.S. Debt Crisis
Economist Olivier Blanchard, formerly of the IMF, is sounding the alarm over America’s soaring $34 trillion national debt, expressing deep concern about the lack of significant efforts to mitigate it.
Known for supporting more relaxed fiscal policies, Blanchard’s apprehension arises from substantial primary deficits and a lack of action toward their reduction. He highlights the precarious path the U.S. is on, potentially leading to a fiscal crisis, with recent policies contributing to deficit spikes and a national debt exceeding 120% of GDP. Speaking before the House of Lords Economic Affairs Committee, Blanchard underscores the absence of attempts to decrease the large primary deficits, emphasizing the unique threat the U.S. situation poses to the global economy.
Meanwhile, Federal Reserve Bank of Atlanta President Raphael Bostic hints at a potential shift in policy rates, suggesting a reduction as early as this summer, contrary to earlier projections for 2024. This adjustment comes in response to recent inflation readings indicating a challenging journey towards the Fed’s 2% target. Bostic emphasizes the importance of vigilance and adaptability to economic data, recognizing the complexities of measuring inflation and heightened risks from geopolitical events. Despite the U.S. economy’s apparent resilience post-pandemic, Bostic underscores the need for ongoing scrutiny of risks posed by non-bank financial entities and emphasizes the robustness of the U.S. banking industry.
Clever Robot News Desk 3rd March 2024
