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Large US household balance sheets pose macro risks

Wednesday, October 13, 2021

Significance

An examination of the factors behind the expansion indicates that outsized balance sheets will persist and will pose a number of macroeconomic risks.

Impacts

  • Slower workforce growth will pressure GDP growth, trade growth and long-term interest rates, unless productivity gains can offset this.
  • A record number of US business deaths and births in 2020 will affect productivity and have unpredictable impacts on the economy.
  • Lower growth makes it harder to stabilise debt-to-GDP ratios, just as pension and health costs rise as populations age in major economies.
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