SALT LAKE CITY — One Utah economist says both the coronavirus health emergency and the growing national debt may have an impact on your finances in a big or small in a post-pandemic world.
Mark Showalter, BYU Economics Department Chair, is warning residents to prepare for a possible spike in prices once the pandemic comes to an end, especially on products with pent-up demand. However, Showalter stated he doesn’t foresee the price increase occurring within the next year.
Additionally, Showalter predicts the growing national debt will impact Utahns on bigger purchases, like their mortgage interest rate on a home.
“What you’re likely to see is possibly a small increase in mortgage interest rates,” Showalter told KSL NewsRadio’s Dave and Dujanovic.
Dealing with national debt
The biggest concern to Showalter is the large sum of debt the United States is in, which is quickly approaching $28 trillion. And President Biden’s proposed $1.9 trillion stimulus package doesn’t ease his worry.
“The United States has been running a deficit almost continually for nearly a century,” and the US has yet to see a consequence for it, said Showalter.
But even though America has yet to face the elephant in the room, that doesn’t mean it won’t have to deal with the burden of the debt one day.
“There is a potential for a problem–a day of reckoning [the national debt],” said Showalter. “What makes it hard is you can’t tell exactly when that’s going to be [dealing with the national debt] and in what form it’s going to be.”
But it’s not unheard of for a country to be forced into grappling with its national debt. Showalter brought up Greece’s national debt crisis about a decade ago as an example.
“[Greece] couldn’t finance their debt, so they couldn’t get any more loans to pay for basic government services,” explained Showalter. “And it caused severe economic problems within the country–massive layoffs because the government had built up a system where they relied on that debt, and all of a sudden, the line of credit was shut off.”
What makes the US different
What sets the US debt apart from other counties, according to Showalter, is based on access to cheap money when in a financial crisis.
“The US has been in a position where they can borrow [money] at really low costs and deal with the worst effects of it. That’s because we have really good credit,” said Showalter. “And even though we do have a lot of debt, markets are willing to loan us money at a pretty low price, so we’re able to transition through this [the pandemic].”
However, at some point, Showalter states America will not be able to sustain the deficit, and no market will provide funds to the nation, causing a slew of possible problems.
The tipping point for the US and its national debt will be during the next crisis, according to Showalter. Whether that be another pandemic, recession or war.
“This is like a termite problem,” said Showalter. “You’re eroding the ability you have to deal with future crises.”
But since we don’t know when the next big calamity will occur, “there is not political effort to take care of things now and put us on a more sustainable path,” Showalter said.
However, one thing is clear, Showalter says — when the next disaster strikes, America better hope it can still borrow money.
I have an idea for a future in-depth report. How do I tell you about it?
Today’s Top Stories
- Update: Bus driver from Alpine School District fired over posters on the bus
- Maggie has her day in the snow
- Utah man finishes World Championship half Ironman while dying from ALS
- Parent speaks about posters found on Alpine School District bus
- Armed robbery at an Ogden 7/11
- Analysts: Mental health calls to Safe UT app ‘more intense’ since pandemic
- Minersville male shot and killed over “self defense” says Sheriff
- Shining a Light on Domestic Violence: Gabby Petito case brings DV to the forefront
- Moab homicide victims told friends if something happened to them, they were murdered
- The FBI-led search for Gabby Petito’s fiance is scaling back but becoming more…