The US national debt has grown by more than $800 billion in just three months amid a fiscal warning from one of the world's largest asset managers.
According to the U.S. Treasury Department's Penny Debt system, the national debt reached an all-time high of $35.668 trillion on October 1, up from $34.841 trillion on July 1, an increase of $827.887 billion.
The new data comes after Fidelity Investments warned that the growing government debt now poses a "threat to the prosperity and security of Americans."
Citing data from the U.S. Treasury Department, Fidelity argues that the debt-to-GDP ratio could rise from the current 123% to 166% within three decades as rising interest costs on the debt reduce the U.S. government's ability to spend on programs that stimulate economic activity.
"...rising debt will also threaten long-term economic growth by increasing the likelihood that taxes will have to be raised significantly in the future. Higher taxes will likely reduce the ability of companies and consumers to generate economic growth through spending and borrowing.
Lower GDP growth will likely lead to lower corporate earnings and stock prices, since stock prices are primarily determined by earnings."
The trillion-dollar asset manager goes on to say:
"Rising debt could not only lead to slower growth and more volatile markets over the long term, but also higher inflation if policymakers decide to cut interest rates to reduce the government's borrowing costs in hopes of avoiding tax increases or unpopular cuts to Medicare and Social Security benefits. Lower interest rates and other monetary policy measures have historically helped fuel inflation."
Fidelity believes that high US government debt could have dire consequences in the long term.
"Over the long term, high government debt could mean slower economic growth, higher taxes and inflation, lower investment returns, and cuts to popular benefits like Medicare and Social Security."
Fidelity Investments currently boasts $14.1 trillion in assets under management.
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