US fiscal profligacy: How much to worry?

In Kürze

The unexpected decision by Fitch to cut the US government top rating to AA+ brought the US’ challenging fiscal outlook top of mind. Fiscal policy is highly procyclical Despite unemployment close to record lows, the fiscal deficit soared to 8.6% in Q2 (12 mth. rolling basis), doubling from the same period last year and reaching levels only seen during the Great Financial Crisis over the past decades.


  • After the last-minute deal on the US debt ceiling in May, the recent downgrade by Fitch and a larger-than-expected bond issuance have brought US fiscal concerns back into the spotlight.
  • The US fiscal deficit has soared to 8.6% of GDP, adding to US growth resilience but undermining the Fed’s inflation fight. A polarised Congress and the 2024 elections will prevent a meaningful policy shift. We expect federal debt to rise from just below 100% to 113% of GDP by 2033, only slightly below CBO estimates.
  • The “exorbitant privilege” of issuing debt in a reserve currency will ensure a high US rating for longer despite worrying fiscal metrics, with a poor handling of future debt ceiling extensions the most prominent risk.
  • High Treasury net supply will decline only slowly, raising the term premium somewhat further. Yet the yield impact will be largely outweighed by economic and key rate developments

Download the full publication below

US fiscal profligacy: How much to worry?

© Generali Investments, alle Rechte vorbehalten. Diese Website wird von der Generali Investments Holding S.p.A. als Holdinggesellschaft der wichtigsten Vermögensverwaltungsgesellschaften der Generali Gruppe zur Verfügung gestellt, die direkt oder indirekt die Mehrheitsbeteiligung an den unten aufgeführten Gesellschaften hält (im Folgenden gemeinsam "Generali Investments"). Diese Website kann Informationen über die Tätigkeit der folgenden Gesellschaften enthalten: Generali Asset Management S.p.A. Società di gestione del risparmio, Infranity, Sycomore Asset Management, Aperture Investors LLC (einschließlich Aperture Investors UK Ltd), Plenisfer Investments S.p.A. Società di gestione del risparmio, Lumyna Investments Limited, Sosteneo S. p.A. Società di gestione del risparmio, Generali Real Estate S.p.A. Società di gestione del risparmio, Conning* und unter deren Tochtergesellschaften Global Evolution Asset Management A/S - einschließlich Global Evolution USA, LLC und Global Evolution Fund Management Singapore Pte. Ltd - Octagon Credit Investors, LLC, Pearlmark Real Estate, LLC sowie Generali Investments CEE. *Einschließlich Conning, Inc, Conning Asset Management Limited, Conning Asia Pacific Limited, Conning Investment Products, Inc, Goodwin Capital Advisers, Inc. (zusammen "Conning").