Goldman Sachs analysts have significantly revised their debt-to-GDP ratio projection for the United States, now forecasting it to reach 130% by 2034, up from th

Goldman Sachs

Goldman Sachs Projects Debt-to-GDP Ratio to Surge to 130% by 2034


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Goldman Sachs analysts have significantly revised their debt-to-GDP ratio projection for the United States, now forecasting it to reach 130% by 2034, up from their previous estimate of 97%. This substantial adjustment reflects a more challenging fiscal environment over the past five years, marked by a persistent primary deficit—excluding interest costs—approximately 5% of GDP wider than historical norms during periods of full employment.

Key Factors Driving the Increase:

  1. Primary Deficit Growth: The primary deficit has widened substantially, reflecting increased government spending and other fiscal pressures that have not been counterbalanced by revenue increases or spending cuts.

  2. Rising Interest Rates: Interest rates on new Treasury debt have roughly doubled, exacerbating the trajectory of the debt-to-GDP ratio and increasing real interest expenses as a share of GDP. This higher cost of borrowing will significantly impact the overall debt burden.

  3. Current Debt Levels: The debt-to-GDP ratio has already climbed by 19 percentage points to 98%, on track to surpass its post-World War II peak. This increase sets a concerning precedent for future fiscal sustainability.

Projections and Assumptions:

  • Long-Term Forecasts: Goldman Sachs' updated projections take into account long-term forecasts for average interest rates on government debt, nominal GDP growth, and primary deficits outside of recessions.
  • r-g Differential: The analysis shows that the debt-to-GDP ratio is highly sensitive to the differential between interest rates and GDP growth (r-g). Goldman Sachs assumes an r-g differential of -0.25 percentage points, consistent with historical averages outside high inflation periods. This differential is a critical factor in their projections.


The revised debt-to-GDP projection underscores the challenges facing the U.S. fiscal policy environment. A ratio of 130% by 2034 would represent a significant increase in the nation's debt burden, posing potential risks to economic stability and growth. Policymakers may need to consider measures to address the widening primary deficit and the rising cost of debt servicing to mitigate the long-term fiscal impact.


Goldman Sachs' updated forecast highlights the urgent need for fiscal reforms to manage the growing debt burden. With interest rates on the rise and primary deficits widening, the path to fiscal sustainability will require strategic adjustments to spending, revenue generation, and debt management practices. The financial community and policymakers must pay close attention to these projections to ensure the U.S. economy remains resilient in the face of increasing fiscal pressures.

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