- The US government's public outstanding debt is on track to surpass $50 trillion by 2033.
- The increase comes out to roughly $5.2 billion every day or $218 million every hour, Bank of America estimated.
- "Central banks may simply bail out governments in coming years via QE," BofA said.
The US government's debt is on track to surpass $50 trillion by 2033, Bank of America said in a Tuesday note, citing data from the Congressional Budget Office.
US public debt outstanding currently sits at $33.6 trillion and is expected to surge by $20 trillion to $54 trillion within the next decade amid "fiscal excess in the 2020s," Bank of America investment strategist Michael Hartnett said.
"US public debt is… more than the combined GDPs of China, Japan, Germany, and India," he wrote, adding that the outstanding debt is set to surge by $5.2 billion every single day, or $218 million every hour, for the next 10 years.
The surge in debt has coincided with an explosion in the federal deficit, which jumped by $320 billion to $1.7 trillion in 2023. That's forced the Treasury Department to auction trillions of dollars of fresh bonds.
Adding to the burden is the surge in annual interest payments caused by spiking bond yields. Those payments are taking up a bigger slice of the federal budget and widening deficits. Estimated annualized debt interest payments surpassed $1 trillion in October.
And as long as US policymakers continue to borrow more heavily and add to the government's outstanding debt, investors are poised to worry about the lingering risks of inflation, bond defaults, and currency debasement, according to BofA.
"Likely central banks may simply bail out governments in coming years via quantitative easing and the introduction of yield curve control (policies that would be US dollar negative)," Hartnett said.
A separate measure of US debt that's more closely followed by economists is "debt held by the public," which is less daunting but still on a steep uptrend. At the end of fiscal 2023, it stood at $26.3 trillion, or 98% of projected GDP, and the CBO sees it climbing to 115% by 2033.
But even if interest rates do fall and the federal deficit is contained, don't expect the federal government to ever stop borrowing money. US debt will always rise because it fuels economic growth and helps drive the circulation of money.