Some Context About All the Debt to GDP Nailbiting

Has America’s debt hit a tipping point? At March’s end, America’s publicly held debt topped 100% of GDP, a mark unseen since 1946 outside a brief blip post-pandemic.[i] Many say this indicates significant fiscal stress (to put it mildly), with gloomy Congressional Budget Office (CBO) projections compounding worries. But comparing debt to GDP, while commonplace, is off base. Governments service debt with tax revenue, not GDP, and Uncle Sam currently collects more than enough to pay his bills. Thus, we think today’s fears of debt sinking America’s economy are false—another bullish brick in stocks’ wall of worry. Read Full Article »