Janet Yellen Says US Debt Levels Are 'Reasonable,' But Warns About Interest Burden

Treasury Secretary Janet Yellen affirms that the current U.S. debt load is manageable, provided it remains at its current level relative to the economy.

What Happened: On Thursday, Yellen stated in a CNBC interview that the burgeoning national debt is manageable as long as it stays around where it is relative to the rest of the economy. She acknowledged the strain high interest rates are placing on the U.S. as it grapples with its massive $34.7 trillion debt load.

"If the debt is stabilized relative to the size of the economy, we're in a reasonable place," she told CNBC's Andrew Ross Sorkin.

"The way I look at it is that we should be looking at the real interest cost of the debt. That's really what the burden is."

Yellen also endorsed President Joe Biden‘s plans to manage the situation, stating his proposed budget for the coming fiscal year includes $3 trillion of deficit reduction over the next decade.

See Also: Fed Meeting Preview: Economists Predict Steady Rates In June, Fewer Cuts Ahead

Why It Matters: The United States has witnessed its national debt increase at an alarming rate of nearly $8.5 billion per day over the past year. This rapid accumulation of debt has raised concerns over the nation’s economic stability, with the total debt reaching a staggering $34.5 trillion.

By May, the U.S. government was spending an unprecedented $2 million per minute on interest alone, a trend that was expected to continue, leading to projected interest payments exceeding $1 trillion for the year.

Adding to the discourse, Jamie Dimon, CEO of JPMorgan Chase & Co. voiced his concerns about the ballooning U.S. fiscal deficit, which had swelled to $1.9 trillion or over 6% of GDP. Dimon warned of the potential problems that could arise from the persistent deficit and unrestrained government spending.

Read Next: Economist Paul Krugman Reacts To May CPI Data: ‘Inflation Has Basically Been Defeated’

Photo by Dustin Blitchok

This story was generated using Benzinga Neuro and edited by Pooja Rajkumari