The top hedge fund manager projects major financial woes for the nation’s economy within three years
Washington has to immediately commit to cutting the deficit or face the risk of a major debt crisis within the next three years, billionaire investor Ray Dalio, founder of Bridgewater Associates, told Bloomberg on Monday. The bearish outlook stems from the US federal budget deficit, which rose to $1.8 trillion in the last fiscal year, ending September 30, 2024.
The staggering figure marks the third-largest federal deficit in US history, after the record-breaking pandemic relief-driven deficits of $3.132 trillion and $2.772 trillion in 2020 and 2021, respectively. For comparison’s sake, the GDP of France was approximately $3 trillion in 2023.
“If you don’t do it, you’re going to be in trouble,” the billionaire suggested in the outlet’s weekly ‘Odd Lots’ podcast.
“I can’t tell you exactly when it’ll come, it’s like the heart attack,” he emphasized. “You’re getting closer, my guess would be three years, give or take a year, something like that.”
The billionaire insisted that “there’s a solution here” that’s “doable” to address the government deficit and an impending debt crisis. US national debt currently stands at $36.2 trillion, according to the Treasury Department. It crossed the $35 trillion mark for the first time last summer.
Dalio’s comments come as the administration headed by US President Donald Trump is working to pass a massive tax cut bill that would also include funds to increase spending on defense and immigration enforcement.
Last week, the US House of Representatives narrowly passed a budget framework designed to cut up to $2 trillion in spending and allow up to $4.5 trillion in tax cuts over the next 10 years. The budget plan would also raise the statutory debt limit by $4 trillion.
According to Dalio, the projected deficit will be about 7.5% of the country’s gross domestic product, once Trump’s tax cuts take effect. The billionaire investor urged for it to be cut to 3%, adding that it would “mean that debts won’t rise relative to incomes, and it will greatly improve supply and demand.”
