Borrowing Beyond Growth
The rising U.S. budget deficit has become a major concern, with 2024 alone seeing a $2 trillion increase. This gap must be funded either by cutting spending, raising revenue, or borrowing more — resulting in a surge of new Treasury debt.
If borrowing continues to outpace economic growth, we could face higher interest rates, which may erode the value of fixed-income investments and cash holdings. Inflation risks and market volatility may also rise as uncertainty grows. This is why it is so important to prioritize the management of investor portfolios with strategies that account for these potential risks that may arise.
2024 Full Year: GDP vs. Budget Deficit vs Debt Change ($BN)
Source: Bloomberg, Redwood, Congressional Budget Office, U.S. Treasury. Data as of 2/7/25.
Regards,
Allgood Financial
Disclosure: This piece is for informational purposes only and contains opinions of Redwood that should not be construed as facts. Information provided herein from third parties is obtained from sources believed to be reliable, but no representation or warranty is made as to its accuracy or completeness. Charts and graphs are for illustrative purposes only. Discussion of any specific strategy is not intended as a guarantee of profit or loss. Past performance is not a guarantee of future results. The objectives mentioned are not guaranteed to be achieved. Investors cannot invest directly in any of the indices mentioned above. Diversification of asset class is not a guarantee against loss. RiskFirst® is a registered trademark of Redwood Investment Management, LLC.
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