Market expert warns U.S. facing ‘granddady of all’ economic disasters

A veteran market commentator has warned that the United States is heading toward what he calls the “granddaddy of all” economic disasters, driven by surging government debt.

In this line, veteran investor Peter Grandich cited projections from the Congressional Budget Office showing federal debt climbing to $64 trillion within the next decade, up from earlier estimates of $50 trillion and $54 trillion. 

Those projections assume no severe recession and no spike in inflation, suggesting the timeline could accelerate if economic conditions worsen.

While he does not forecast an immediate collapse, Grandich noted that the current trajectory puts the country within range of a major fiscal reckoning during the lifetimes of most investors and workers, he said in an interview with David Lin published on February 20. 

At an average refinancing rate of 5%, Grandich said servicing that debt would result in more than $3 trillion in annual interest payments.

He noted that total U.S. government revenue peaked at about $5.2 trillion in its strongest year on record. Even if revenue rose to $6 trillion, interest payments alone would consume more than half, leaving less for core government functions.

Notably, interest payments have nearly tripled in nominal terms since 2020 as borrowing increased and rates climbed. 

Although overall government spending continues to rise, the investor argued that fiscal flexibility narrows as interest costs take up a larger share of revenue.

States facing pressure

Grandich also pointed to debt pressures beyond the federal level, saying several states face budget strains and some cities carry growing liabilities. He added that elevated consumer and corporate debt levels represent a broader structural risk to the economy and weigh on long-term growth prospects.

At the same time, he warned that deep political divisions in Washington could complicate any response to the next financial crisis, questioning whether lawmakers could agree on credible fiscal reforms or emergency measures if conditions deteriorate.

For households, the impact could be direct with Grandich expecting higher taxes, new fees, and reduced public services to become more likely, noting that some states and municipalities are already relying more on fee-based charges that disproportionately affect middle- and lower-income Americans.

The warning comes as many U.S. households report living paycheck to paycheck, limiting their ability to absorb higher costs.

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