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Black Swan Risks Heading into 2016 [Chart]

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Black Swan Risks Heading into 2016 [Chart]

Black Swan Risks Heading into 2016 [Chart]

SocGen’s latest evaluation still sees steep downside risk to market

The Chart of the Week is a weekly Visual Capitalist feature on Fridays.

Société Générale has come out with their most recent list of what the bank considers to be potential “black swans” to the market.

France’s third largest bank publishes this list as part of their Global Economic Outlook. As several users have pointed out in the past, we are indeed aware that black swans are by nature unlikely and extremely difficult to predict. We agree with this, but we do find SocGen’s list a useful way of understanding some of the upcoming risks in the market that could sway investor sentiment and opinion.

In the latest edition of the report, which was published this week, the bank still sees an excess of potential downside risks to the global economy. The greatest of these risks, slated at only a 10% probability but with maximum impact potential, is a new global recession. The report mentions as well that a hard landing in China could have similar effects.

Downside risks and their probability:

  • 45% – Great Britain leaves the EU (Impact: low)
  • 30% – China’s economy has a hard landing (Impact: high)
  • 25% – U.S. consumers save more than expected (Impact: medium)
  • 10% – Fed hikes too late (Impact: medium to high)
  • 10% – New global recession (Impact: high)

Upside risks and their probability:

  • 20% – Stronger investment and trade (Impact: medium to high)
  • 15% – More fiscal accommodation (Impact: medium)
  • 10% – Fast track reform (Impact: low)

One risk that could be added to the mix is some sort of a deflationary spiral. These are words that no central banker wants to hear, but signs of deflation are popping up all over the market. For example, as we showed in a recent chart, nearly all commodities got hammered over 2015.

The impact of such a spiral would be catastrophic, and the Fed has limited means to combat such an event. That said, it is tough to discern whether deflation will continue to be found sprinkled benignly throughout the economy, or if it could somehow snowball into the full-on death spiral.

Black swan indeed.

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U.S. Debt Interest Payments Reach $1 Trillion

U.S. debt interest payments have surged past the $1 trillion dollar mark, amid high interest rates and an ever-expanding debt burden.

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This line chart shows U.S. debt interest payments over modern history.

U.S. Debt Interest Payments Reach $1 Trillion

This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.

The cost of paying for America’s national debt crossed the $1 trillion dollar mark in 2023, driven by high interest rates and a record $34 trillion mountain of debt.

Over the last decade, U.S. debt interest payments have more than doubled amid vast government spending during the pandemic crisis. As debt payments continue to soar, the Congressional Budget Office (CBO) reported that debt servicing costs surpassed defense spending for the first time ever this year.

This graphic shows the sharp rise in U.S. debt payments, based on data from the Federal Reserve.

A $1 Trillion Interest Bill, and Growing

Below, we show how U.S. debt interest payments have risen at a faster pace than at another time in modern history:

DateInterest PaymentsU.S. National Debt
2023$1.0T$34.0T
2022$830B$31.4T
2021$612B$29.6T
2020$518B$27.7T
2019$564B$23.2T
2018$571B$22.0T
2017$493B$20.5T
2016$460B$20.0T
2015$435B$18.9T
2014$442B$18.1T
2013$425B$17.2T
2012$417B$16.4T
2011$433B$15.2T
2010$400B$14.0T
2009$354B$12.3T
2008$380B$10.7T
2007$414B$9.2T
2006$387B$8.7T
2005$355B$8.2T
2004$318B$7.6T
2003$294B$7.0T
2002$298B$6.4T
2001$318B$5.9T
2000$353B$5.7T
1999$353B$5.8T
1998$360B$5.6T
1997$368B$5.5T
1996$362B$5.3T
1995$357B$5.0T
1994$334B$4.8T
1993$311B$4.5T
1992$306B$4.2T
1991$308B$3.8T
1990$298B$3.4T
1989$275B$3.0T
1988$254B$2.7T
1987$240B$2.4T
1986$225B$2.2T
1985$219B$1.9T
1984$205B$1.7T
1983$176B$1.4T
1982$157B$1.2T
1981$142B$1.0T
1980$113B$930.2B
1979$96B$845.1B
1978$84B$789.2B
1977$69B$718.9B
1976$61B$653.5B
1975$55B$576.6B
1974$50B$492.7B
1973$45B$469.1B
1972$39B$448.5B
1971$36B$424.1B
1970$35B$389.2B
1969$30B$368.2B
1968$25B$358.0B
1967$23B$344.7B
1966$21B$329.3B

Interest payments represent seasonally adjusted annual rate at the end of Q4.

At current rates, the U.S. national debt is growing by a remarkable $1 trillion about every 100 days, equal to roughly $3.6 trillion per year.

As the national debt has ballooned, debt payments even exceeded Medicaid outlays in 2023—one of the government’s largest expenditures. On average, the U.S. spent more than $2 billion per day on interest costs last year. Going further, the U.S. government is projected to spend a historic $12.4 trillion on interest payments over the next decade, averaging about $37,100 per American.

Exacerbating matters is that the U.S. is running a steep deficit, which stood at $1.1 trillion for the first six months of fiscal 2024. This has accelerated due to the 43% increase in debt servicing costs along with a $31 billion dollar increase in defense spending from a year earlier. Additionally, a $30 billion increase in funding for the Federal Deposit Insurance Corporation in light of the regional banking crisis last year was a major contributor to the deficit increase.

Overall, the CBO forecasts that roughly 75% of the federal deficit’s increase will be due to interest costs by 2034.

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