Wharton Academic Forecasts 2025 Economic Crisis Due to $34 Trillion Debt, Likely to Pose Challenges for Upcoming Administration

The USA’s Federal Debt, currently a staggering $34 trillion, could potentially disrupt the global economy as early as next year. This dire prediction was given by Professor Joao Gomes, a distinguished finance expert from the Wharton Business School. He warns that if the future president of the USA pursues costly policies, the growing ‘debt mountain’ could derail the next administration.

Echoing his concerns are various financial experts who foresee the debt-to-GDP (Gross Domestic Product) ratio soaring to a mind-boggling 190% by 2050 if the economy continues on its current route. As a historical comparison, the administrations helmed by Presidents Biden and Trump have seen the largest deficit accumulations since the era of President Roosevelt’s response to the Great Depression.

This stark rise in debt is partly attributable to the devastating impact of the COVID-19 pandemic on both the national and global economy. Despite the grave implications of this looming debt, Professor Gomes suspects that neither the Republican nor Democratic parties will view this as a priority issue.

In 2023, the US national debt reached an alarming high of $34 trillion. This figure equates to an overwhelming $101,233 of debt per person in America, according to the Peter G. Peterson Foundation. The exponential expansion of the deficit further results in the government expending over $1.8 billion daily on interest payments alone, holding substantial implications for the future of the US economy.

This mounting debt load could escalate inflation, result in costlier household borrowing, and put key national programs such as Social Security and Medicare under strain. Rising interest payments on national debt are forecasted to overshadow defense spending soon.

Maya MacGuineas, president of the Committee for a Responsible Federal Budget, called this level of debt “dangerous” and deemed the record figure an utterly “depressing achievement.” According to the non-partisan Congressional Budget Office, interest payments are currently the fastest-growing part of the federal budget.

This translates into a grim future where, by 2024, only Social Security will cost the government more than interest payments. Hence, lawmakers and the future president face the pressing task of mitigating the mounting debt, with the clock ticking ever louder.