Moody's economist warns of early signs of U.S. debt crisis

Mark Zandi, chief economist at Moody's, has identified early signs of discomfort within the U.S. Treasury market, suggesting the potential for a fiscal spiral. While some analysts argue that the scale of the U.S. economy mitigates the risk of a debt crisis, Zandi notes that the nation's situation is “far and away the most important one” due to its global economic influence.

The U.S. national debt currently exceeds $40 trillion, with a debt-to-GDP ratio of approximately 126%. This metric is a primary concern for debt hawks, who argue that the ability to repay debt depends on the government's capacity to sustain spending relative to economic growth.

Different experts propose varying outcomes for a potential crisis: Bridgewater Associates founder Ray Dalio has suggested the U.S. could face an economic “heart attack,” while Kent Smetters of the Wharton School has previously posited that the country might inflate its way out of such a situation.