DoubleLine Publishes New Briefing on Federal Debt and Deficit Spirals

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DoubleLine has published a new research paper by Ryan Kimmel, updating his 2023 outlook on U.S. budget deficit and debt spirals. The paper, titled "U.S. Debt Spiral Briefing: A Scenario Survey as Washington Drifts Toward a Reckoning," explores potential trajectories under various interest rate scenarios.

Kimmel highlights a concerning trend: since 2016, federal deficit spending has broken its decades-long pattern of shrinking during economic expansions. This persistence raises the risk of deeper debt-funded deficits in future recessions. The paper also notes that major institutions like the Congressional Budget Office and International Monetary Fund have issued cautionary statements on the sustainability of the U.S. government's fiscal path.

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TAMPA, Fla., July 31, 2024 /PRNewswire/ -- In a new research paper, DoubleLine Macro Asset Allocation Analyst Ryan Kimmel updates his 2023 outlook on the possible trajectories of the U.S. budget deficit and debt spirals toward theoretical crisis levels under different interest rate scenarios.

The research paper, "U.S. Debt Spiral Briefing: A Scenario Survey as Washington Drifts Toward a Reckoning," can be accessed here: https://doubleline.com/wp-content/uploads/Debt-Spiral-Briefing_Kimmel_July-2024.pdf

Among emerging risks identified in the briefing, Mr. Kimmel notes that, since 2016, federal deficit spending have broken its decades along pattern of shrinking to more manageable levels during economic expansions after expanding to stimulate the economy during recessions. "Not only do large deficits during growth periods reflect a troubling trend of government spending outpacing revenue generation," he writes, "their persistence raises the danger of much deeper debt-funded deficits in the next and future recessions."

Figures in asset management and banking have issued warnings before about Washington's deficit and debt spirals. This year, Mr. Kimmel points out in his paper, major public institutions – namely, the Congressional Budget Office and International Monetary Fund – now have issued cautionary statements on the sustainability of the U.S. government's fiscal path.

About DoubleLine

DoubleLine Capital LP is an investment adviser registered under the Investment Advisers Act of 1940. DoubleLine's offices can be reached by telephone at (813) 791-7333 or by email at info@doubleline.com. Media can reach DoubleLine by email at media@doubleline.com. DoubleLine® is a registered trademark of DoubleLine Capital LP.

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SOURCE DoubleLine

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

What is the main focus of DoubleLine's new research paper on U.S. debt?

The research paper focuses on potential trajectories of U.S. budget deficit and debt spirals under different interest rate scenarios, updating the 2023 outlook.

What concerning trend does Ryan Kimmel highlight in the DoubleLine research paper?

Kimmel highlights that since 2016, federal deficit spending has broken its decades-long pattern of shrinking during economic expansions, raising concerns about deeper debt-funded deficits in future recessions.

Which major institutions have issued cautionary statements on U.S. fiscal sustainability?

The Congressional Budget Office and International Monetary Fund have issued cautionary statements on the sustainability of the U.S. government's fiscal path.

Where can investors access DoubleLine's new research paper on U.S. debt?

The research paper can be accessed on DoubleLine's website at https://doubleline.com/wp-content/uploads/Debt-Spiral-Briefing_Kimmel_July-2024.pdf