The US public debt load will hit be bigger than the entire $21 trillion economy by October, watchdog warns

• Publicly held debt in the US will reach $20.61 trillion by October, the Committee for a Responsible Federal Budget projected on Monday, just surpassing the US's nominal GDP of $20.58 trillion.
• The debt-to-GDP ratio will pass the previous record of 106% set in World War II by 2023, the committee added.
• The US deficit will also swell to historic highs amid widespread spending on coronavirus relief. The CRFB estimates the budget shortfall will nearly quadruple to $3.8 trillion from $984 billion in 2020.
• The debt and deficit forecasts are likely conservative, the committee cautioned, as the government is poised to spend more on economic stimulus, and cheap borrowing costs could drive more Americans to take out loans.
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Americans' debt will surpass the size of the US economy by October and surge past the record posted in World War II by 2023, the Committee for a Responsible Federal Budget forecasted on Monday.

Debt soared by 21% of the country's gross domestic product from 2008 to 2010, and the government watchdog expects a similar swell in borrowed cash to take place over just seven months. The figure will swell to $20.61 trillion by October 1, according to Bloomberg calculations of CRFB data, overtaking the US's nominal GDP of $20.58 trillion. The debt-to-GDP ratio will pass the WWII record of 106% by 2023 as the borrowing streak continues.

The public debt load will likely remain well above total economic output until at least 2025, the committee added.

The US deficit will also swell to new highs amid record spending on economic relief programs. The CRFB sees the budget shortfall nearly quadrupling to $3.8 trillion from $984 billion in 2020. The only period that saw a similar deficit-to-GDP ratio was three years of World War II, according to the committee's report.

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The committee's GDP estimates assume the economy will rebound from its coronavirus-induced slump in 2021 and return to pre-crisis levels of output by 2025. The proportion of debt to GDP could swell further in the case of a sluggish recovery. The International Monetary Fund estimated Tuesday that the "Great Lockdown" recession will be the worst economic downturn in nearly a century, and that several risks stand to drag economies into longer troughs than expected.

Both deficit and debt estimates are likely conservative, the CRFB cautioned. The metrics are calculated under current law, yet uncertainty around the coronavirus's total economic toll clouds the potential worst-case scenario. The government's $2 trillion relief measure accounted for much of this year's addition to the deficit, according to the committee, and it's "extremely likely" Congress will pass new spending measures to further pad against the outbreak's fallout.

"In theory, our projections could be too high or too low, but in reality, deficits and debt are likely to be much higher than we project," the committee wrote. "At some point, such high and rising deficits and debt levels will prove unsustainable, and corrective action will be needed."

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