The mountain of US debt is growing out of control, BlackRock’s Larry Fink said. The national debt just topped $32 trillion for the first time in June. But GDP growth of 3% or more could solve that problem, Fink told CNBC on Friday. Loading Something is loading.
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US debt is spiraling out of control – but a solution could lie in the economy’s accelerating growth, according to BlackRock chief Larry Fink.
“Our deficits are out of control,” Fink said in an interview with CNBC on Friday, pointing to the growing mountain of US debt after Congress suspended the limit on national borrowing. The total federal debt balance now hovers around $32.5 trillion, with $1 trillion being racked up in the past month alone.
Considering the high level of interest rates, some experts have sounded the alarm for a potential debt crisis, as the US will need to spend a larger share of its income to service its obligations. Interest payments alone will notch $663 billion this year, which could snowball into $10.6 trillion in total interest payments through the next decade, according to an estimate from the Congressional Budget Office.
But a solution could lie in the US’s economic growth, Fink said, which he predicted would pick up in the coming years thanks to ongoing fiscal stimulus measures, such as the CHIPS Act and President Biden’s $1 trillion bill to boost America’s infrastructure.
“That’s all starting to come to the economy. So actually, I think our economy is going to accelerate,” Fink said, adding that a 3% growth rate could remedy budget pressures from higher interest rates.
The domestic economy is also “stronger than any place in the world,” he added, pointing to factors like strong innovation and entrepreneurship in the US
US real GDP grew 2% in the first quarter this year, according to the Bureau of Economic Analysis, lagging slightly behind 2.6% growth in the previous quarter.
Still, experts have noted the economy remains relatively strong despite the Fed’s aggressive monetary tightening measures. The job market added 209,000 payrolls last month while inflation fell to 3% – data points that could signal a greater likelihood the US is able to avoid a recession.