National Debt Exceeds Previous Projections, Signaling Troubling Times Ahead for the U.S. Economy as per CBO March report
The Congressional Budget Office (CBO) performs nonpartisan analysis for the U.S. Congress. The latest Budget and Economic Outlook released March 2024, offered dire projections for the country’s fiscal and economic landscape over the upcoming decades. Unfortunately the national debt is higher than initially anticipated and is projected to hit $141 trillion by 2054.
Record High Budget Debt
The federal debt’s proportion of the U.S. economy is on track to reach 107% of the GDP by 2029 and is expected to keep climbing for the following three decades, highlighting the country’s significant long-term fiscal challenges.
The debt is expected to swell to 166 percent of GDP by 2054.
Federal Budget Deficit Increasing
The deficit is expected to increase from the current high levels of 5.6% of GDP in 2024 to 8.5% of GDP by 2054.
Gap Between Spending and Revenue Increasing
Between 2024 and 2054, the average growth rate of federal spending outpaces that of revenues, with both metrics constituting a larger share of GDP than their average presence over the previous 50 years. This trend suggests that spending and revenues will occupy a more significant portion of the economy over this 30-year horizon, compared to historical averages.
Interest Cost Will Soar
The budget office has issued a warning that the escalating debt presents “significant risks” to the future economic outlook of the U.S., increasing interest payments to foreign bondholders and hindering economic growth in the upcoming years.
By 2054, interest payments on the national debt are projected to surge to 6.3 percent of the Gross Domestic Product (GDP), while expenditures on social safety net programs will constitute over half of the nation’s remaining spending.
Trust Funds Approaching Insolvency
Critical trust funds face looming insolvency. The Highway Trust Fund is anticipated to exhaust its reserves by 2028, the Social Security retirement trust fund by 2033, and the Medicare Hospital Insurance trust fund is on track to deplete its funds by the mid-2030s. The insolvency of these funds would trigger automatic, across-the-board reductions in their payouts.
Social Security Insolvency
The CBO projects that the Social Security Old-Age and Survivors Insurance (OASI) trust fund will run out of funds by 2033, coinciding with the moment when individuals currently aged 58 reach the official retirement age and the youngest of today’s retirees hit 71. Consequently, all recipients will experience an automatic 25 percent reduction in benefits, irrespective of their age or financial situation. The solvency analysis by CBO matches the projections included in the Social Security Trustees Report.
Economic Growth Slows as Unemployment Increases
In 2024, economic growth decelerates, and unemployment rises, partly due to a tight monetary policy. The Federal Reserve is expected to respond to the economic challenges of 2024 by reducing interest rates.
U.S. Government Accountability Office Warning on Fiscal Health
The CBO report is not the only agency sounding the alarm bells. The U.S. Government Accountability Office published a report last month on the nation’s fiscal health. The report states, “The federal government faces an unsustainable long-term fiscal path that poses serious economic, security, and social challenges if not addressed.”
The only silver lining in the CBO report is that the federal debt as a share of GDP in 2053 is now estimated to be 17 percentage points lower compared to projections last year. The decrease in projected deficits can be largely attributed to a cut in discretionary spending, which results from the annual budget caps established by the Fiscal Responsibility Act of 2023 and further enforced by the Further Continuing Appropriations and Other Extensions Act, 2024.
Bleak Outlook Based on the CBO Analysis
The Congressional Budget Office (CBO) Economic Outlook, projects significant fiscal challenges for the U.S. over the next decade. Federal debt is expected to reach a record 166% of GDP by 2054. The gap between government spending and revenue continues to widen, with interest costs on the rise. Additionally, critical trust funds, including those for Social Security and Medicare, are approaching insolvency, threatening across-the-board cuts. Economic growth is anticipated to slow in 2024, leading to increased unemployment. With the U.S. consumer already under pressure, the upcoming decade looks challenging.
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11 Low-Stress Retirement Jobs to Keep You Happy and Healthy
After working so many years, it feels great to be able to retire. All those years playing with the best retirement calculators and planning how to retire early have finally paid off. So many plans, like travel, relaxing, working in the yard and doing other things you’ve put off for years. But after a while, many retirees get bored. Getting a job after retiring is a great way to stay active physically and mentally. Most retirees want to stay stress-free while still working at a new job. Retirees have a lot of knowledge and skills to offer. There are many low-stress jobs that retirees can do. Thankfully, some of the best low-stress jobs are some of the more exciting jobs a retiree can do. Before we jump into the list of retirement jobs, there are 5 benefits of finding a low-stress job for retirees.
11 Low-Stress Retirement Jobs to Keep You Happy and Healthy
Exodus From California and Massachusetts to Florida and Texas Continues
2023 saw booming demand for U-Haul equipment from California, Massachusetts, Illinois, and New Jersey as citizens chose to flee the West Coast and Northeast. On the U-Haul Growth Index, which shows net losses of one-way trucks in various states that year, California, Massachusetts and Illinois ranked 50th, 49th and 48th, respectively – marking their third consecutive year at the bottom positions. But what could be causing such a mass exodus from states like California, New York, and Illinois?
Exodus From California and Massachusetts to Florida and Texas Continues
Top 10 Housing Markets Where Soaring Prices Leave Locals Priced Out, Defying Historical Norms
Real estate economists at Florida Atlantic University analyzed average expected home values based on historical data against current list prices across the nation’s 100 largest metro areas. The study used publicly available data from online real estate portal Zillow or other providers from January 1996 through the end of last month, for single-family homes, townhomes, condominiums and co-ops. The research aims to pinpoint cities with significant price disparities, shedding light on the challenges faced by long-time residents priced out of their neighborhoods amidst soaring real estate costs. Besides home owners, the findings are also important for real estate investing to identify pockets of exuberance and analyze if the higher priced metros deserve the price jump compared to historical trends. Here are the top 10 cities where current prices are much higher compared to their historical prices.
Top 10 Housing Markets Where Soaring Prices Leave Locals Priced Out, Defying Historical Norms
Retire Abroad and Still Collect Social Security? Avoid These 9 Countries Where It’s Not Possible
Dreaming of retiring to a sun-drenched beach or a quaint village? Many Americans envision spending their golden years abroad, savoring the delights of new cultures and landscapes. However, an essential part of this dream hinges on the financial stability provided by Social Security benefits. Before packing your bags and bidding farewell, it’s crucial to know that not all countries play by the same rules when it comes to collecting these benefits overseas. Here are the nine countries where your dream of retiring abroad could hit a snag, as Social Security benefits don’t cross every border. Avoid living in these countries so your retirement plans don’t get lost in translation.
Retire Abroad and Still Collect Social Security? Avoid These 9 Countries Where It’s Not Possible
John Dealbreuin came from a third world country to the US with only $1,000 not knowing anyone; guided by an immigrant dream. In 12 years, he achieved his retirement number.
He started Financial Freedom Countdown to help everyone think differently about their financial challenges and live their best lives. John resides in the San Francisco Bay Area enjoying nature trails and weight training.
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M1 Finance: John compared M1 Finance against Vanguard, Schwab, Fidelity, Wealthfront and Betterment to find the perfect investment platform. He uses it due to zero fees, very low minimums, automated investment with automatic rebalancing. The pre-built asset allocations and fractional shares helps one get started right away.
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