(Bloomberg) — Goldman Sachs Group Inc. updated its longer-term US fiscal outlook Wednesday, with its new projections seeing a key metric of debt sustainability head to historically extreme levels.
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“The outlook for US fiscal sustainability has become more challenging over the last five years,” Goldman Sachs economists Manuel Abecasis and David Mericle wrote in a note to clients. “Higher expected future interest rates in particular have substantially worsened the trajectories of the debt-to-GDP ratio and of real interest expense as a share of gross domestic product.”
Treasury Secretary Janet Yellen has repeatedly referenced net inflation-adjusted interest payments as a proportion of GDP as her main metric of debt sustainability. She said in an interview with Bloomberg last year that a rate of 1% was “absolutely fine, there’s nothing worrisome about that.”
Goldman’s updated projections have that…
