The U.S. has benefited from low-cost debt to rebuild the economy but the Treasury department issued a warning that the cost to service the debt will triple as interest rates rise. By 2016, it is expected that the interest cost alone to service the debt will reach 3.1 percent of Gross Domestic Product.
“It’s a slow train wreck coming and we all know it’s going to happen,†said Bret Barker, an interest-rate analyst at Los Angeles-based TCW Group Inc. “It’s just a question of whether we want to deal with it. There are huge structural changes that have to go on with this economy.â€
Source: Bloomberg
