The government's debt total may still be rising, but its fiscal position is a lot better than a few years ago, says
MarketWatch columnist Howard Gold.
"The U.S. debt burden . . . has quietly improved," he writes.
The budget deficit shrank to $506 billion in the year ended Sept. 30, or 3 percent of GDP, from 10 percent of GDP in 2009. And the Congressional Budget Office doesn't expect the dollar amount to change much during the next five years.
"The big improvement in the federal debt should be a boon to the U.S., which has been a magnet for global capital over the last couple of years," Gold writes.
Although the CBO projects total government debt held by the public will reach a 64-year high of 74 percent of GDP this year, the office doesn't see that changing much either before 2020.
To be sure, one may wonder how a 64-year high for the debt-to-GDP ratio constitutes substantial progress.
And Gold himself points out that "if we don’t address long-term obligations like Social Security and Medicare, the decade of the 2010s may turn out to be a quiet respite before the retirement of millions of Baby Boomers puts us back in the fiscal soup."
Meanwhile, although the financial system is in better shape than prior to the 2008-09 financial crisis, "that relatively benign backdrop is no cause for complacency," says Richard Berner, director of the Treasury Department's Office of Financial Research.
"Rather, there is good reason to watch financial developments closely," he writes in a letter accompanying the Office's annual report. Threats to financial stability include "excessive risk-taking" and reduced market liquidity, the report says.
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