Mounting U.S. Public Debt: How Worried Should We Be?

PGIM Fixed Income

April 2020

By Nathan Sheets, PhD, Chief Economist and Head of Global Macroeconomic Research, and George Jiranek, Associate, Global Macroeconomic Research

As U.S. fiscal spending ramps up to counter the coronavirus shock, we believe that higher U.S. debt levels can be safely absorbed. The demand for Treasuries is substantial. But the capacity to issue Treasuries cannot be unlimited, and it’s not prudent to find out where the limits might be. While the use of fiscal tools in the current situation is altogether appropriate, in the aftermath of the crisis, policymakers should focus on putting U.S. fiscal performance on firmer footing.