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Financial Markets
July 17, 2024
High Debt Loads Are Common but U.S. Unique in Size of Ongoing Deficits
The United States, like other major economies, has seen a large increase in its debt and deficits in recent years. Most major economies have a need to reduce their deficits to prevent their debt from becoming unsustainable. The difference between the US and its peers is in the trajectory of debt and deficits. Smaller deficits are expected to reduce the debt to GDP ratio in most other advanced economies, but not in the U.S.
July 16, 2024
Smooth Sailing: Analyzing the Drivers of Easing U.S. Financial Conditions
U.S. financial conditions – a measure of the health of financial markets - have eased to their loosest levels since the Federal Reserve started hiking interest rates in 2022. This is largely in part due to robust economic growth that has been complemented by excitement related to generative AI, huge investments in the green transition, and the promise of lower interest rates from the Fed.
June 05, 2024
Sustaining U.S. Government Debt Will Force Hard Choices in the Future
The U.S. federal government has run a deficit virtually every year for the past forty years. In 2024, the deficit will be around 4% of nominal gross domestic product (GDP). Under current policy, the Congressional Budget Office (CBO) projects that it will remain around this level for the next decade. This will lead to an increase in federal government debt held by the public, from 99% of GDP in 2024 to 116% of GDP in 2034.
June 03, 2024
A Sticky Situation: U.S. Shelter Inflation Easing, But Upside Risks Ahead in 2025
Shelter costs have been a key source of stickiness in U.S. inflation. Because housing represents more than one-third of the overall CPI basket, it remains the single biggest contributor to underlying inflation, and a key force preventing inflation from returning to the Fed’s target.