America Has a Debt Problem. Here's What That Means for You.

Barron's Retirement

By Elizabeth O'Brien | Sunday, May 18

The general sentiment among investors is that the country's $1.05 trillion deficit isn't a problem until the bond market decides it is. When that will happen is anyone's guess. But signs of unease have already started to emerge in the form of elevated Treasury yields. (Yields move inversely to prices, and lower prices signal a weaker appetite for government debt.) And they might mount after Moody's downgrade of U.S. debt on Friday afternoon.

The so-called big, beautiful bill wending its way through Congress would not make a meaningful dent in the country's debt–that is, the bonds the country issues to fund the deficit, or the difference between what Uncle Sam collects in revenue and what the country spends. In fact, the budget bill is shaping up to add trillions to the debt, according to a running tally by the Committee for a Responsible Federal Budget.

What does this all mean for investors? Long-term, America's debt will weigh on the returns of both stocks and bonds. Read more about the outlook in today's edition.

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