Morgan Stanley Sees US Debt-to-GDP Ratio Down 7 Percentage Points in 2022

Morgan Stanley Sees US Debt-to-GDP Ratio Down 7 Percentage Points in 2022
The logo for Morgan Stanley on the trading floor at the New York Stock Exchange (NYSE) in New York City, on Aug. 3, 2021. Andrew Kelly/Reuters
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A huge U.S. fiscal deficit from the first two years of COVID-19 spending should decline rapidly to near pre-pandemic levels, largely due to a rebound in economic growth, analysts at Morgan Stanley said on Thursday.

In a research note, the investment bank’s economists predicted the debt-to-gross domestic product ratio should decline 7 percentage points in 2022, after reaching the highest level since World War Two during the pandemic. Real growth will contribute about 6 percentage points and inflation a similar percentage, offset by interest expenses and primary deficit spending.