The US economy is 'on steroids' and big government spending will soon hit the market, legendary investor Paul Tudor Jones

• There's a "debt bomb" looming over the US, billionaire investor Paul Tudor Jones said.
• The US economy looks like it's "on steroids" as high government spending powers growth.

The US economy is "on steroids" thanks to the government's rapid pace of borrowing and spending, according to legendary investor Paul Tudor Jones.

The billionaire hedge fund manager pointed to the stunning strength of the economy, with GDP growth for the first quarter of this year estimated to come in at around 4.2%, according to the Atlanta Fed's GDPNow tracker. The government's pace of borrowing and spending is driving the stunning growth of the US economy in recent quarters, Jones said, adding that the consequences will soon be felt.

"I think it's strong," Jones said of the economy in an interview with CNBC on Monday. "Why shouldn't it be? We've got a 6%-7% budget deficit. We're fast-pouring consumption like crazy. It should be going gangbusters because we've got an economy on steroids, and it's unsustainable."

Economists have become increasingly alarmed over the rapid pace of government spending, with the total debt balance notching $34 trillion at the start of this year. In particular, Jones pointed to Fed Chair Jerome Powell's comments in a "60 Minutes" interview on Sunday, where the chief central banker warned the US was on an "unsustainable fiscal path."

The bond vigilantes made a lot of noise about US debt amid the Treasury market turmoil at the end of last year, but otherwise, investors don't appear overly concerned about the US debt balance yet. Still, the impact of big deficit spending will be felt in markets sooner or later, Jones said.

"The only question is … when does that manifest itself in markets?" Jones said. "It could be this year, it could be next year. Productivity may mask and it might be three or four years from now. But clearly, clearly we're on an unsustainable path."

Debt will be one of the prevailing themes that defines the economy in the coming years, Jones said, warning of a "debt bomb" in the US resulting from "fiscal recklessness." The pressures building as a result of government debt are expected to clash with productivity gains from AI, which he predicted could be "stupendous" over the coming years.