CBO Director projects 5%-6% real growth Needed to stabilize debt

On Oct. 8, CBO Director Phillip Swagel told Minneapolis Fed President Neel Kashkari that real GDP growth of roughly 5%–6% would Be Needed to stabilize the U.S. Debt trajectory, with nominal growth of about 7%–8% Under interest rates between 4% and 5%.

The estimate is well above the 2.2% annualized real GDP growth recorded in the second quarter, which covered April through June. Real GDP growth measures output after adjusting for price changes, while nominal growth also includes inflation. Faster growth could boost federal revenue but also create higher spending pressures and interest costs if stronger expansion pushed rates higher.

CBO’s baseline projects that federal debt held by the public will rise from 101% of GDP in 2026 to 120% in 2036, with a $1.9 trillion deficit in fiscal 2026 widening to $3.1 trillion in 2036. The agency assumes a 10‑year Treasury yield of 4.3% from 2026 through 2036; in a scenario with rates 150 basis points higher, the yield rises to 5.8%, and debt reaches 133.1% of GDP in 2036. CBO projections show debt continuing to rise even as the economy expands, leaving changes to federal revenue and spending as the remaining policy choices highlighted by Swagel.

Read the full story at tokenpost.com.