"One scenario is that growth continues more or less as it has for the last 20 years. If so, the current federal fiscal trajectory is unsustainable,"
"I think that's probably the most likely consequence of the path we're on,"
"If we were to get a major acceleration in productivity growth, then a lot of this fiscal bad news would suddenly look more controllable and more sustainable,"
"So I think we're somewhat hostages to fortune on what the rate of growth is."
Rising federal deficits could trigger a bond-market reckoning that forces investors to demand higher yields to buy government debt, causing a sharp jump in the 10-year Treasury yield and a one percentage-point rise in mortgage rates over a short period. A major acceleration in productivity driven by artificial intelligence could boost growth and government revenues, making the fiscal outlook more sustainable and reducing pressure on yields and mortgage rates. The timing of any bond-market response is uncertain and depends critically on future growth and productivity trends. Ballooning federal debt remains a central fiscal risk.
Read at Real Estate News & Insights | realtor.com
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