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Billionaire investor Ray Dalio is keeping a close eye on the “risky” US fiscal situation.
“We’re going to have a debt crisis in this country,” the founder of hedge fund Bridgewater Associates said in an interview with CNBC’s Sarah Eisen that aired Thursday. The two were speaking at a fireside chat at the Managed Funds Association. “I think how fast that happens will depend on the supply-demand issue, so I’m watching it very closely.”
The US debt level exceeded $33 trillion for the first time this month as lawmakers negotiate a US spending bill ahead of an October 1 deadline. Failure to reach an agreement could mean a government shutdown and increase the perceived risk of the country’s debt.
According to the US Treasury Department, US debt levels have increased in recent years, especially after a nearly 50% increase in federal spending between fiscal 2019 and fiscal 2021. Investors fear that interest rates may continue to rise due to the worsening US fiscal situation, which will affect demand for Treasuries.
Dalio worries that there are more headwinds for the economy than just high debt levels, saying growth rates could drop to zero, give or take 1% or 2%.
“I think you’ll see a meaningful slowdown in the economy,” Dalio said.
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