Swelling government debt levels are shaping up to be the biggest economic challenge for President Donald Trump, a problem that could spill into the stock market.
This week's Treasury Department announcement that it would have to increase the amount of bond auctions over the next three months was a low-key reminder that the government IOU is only getting bigger and will start influencing interest rates sooner rather than later.
As more product comes to market, investors could be expected to demand higher yields to snap up all the supply. And those higher yields mean higher costs at a time when taxpayers already have shelled out nearly half a trillion dollars this year in debt service.
Put it all together and it raises questions about how long the spurt in economic growth will continue, what will happen the next time the economy falls into recession and what impact it all will have on financial markets.
"We're applauding strong growth — yet have no choice but to borrow the largest amount of money since the financial crisis a decade ago," Bernard Baumohl, chief global economist at The Economic Outlook Group, said in a note. "And that's just the start, the US will [be] running trillion dollar deficits as far as the eye can see."