Billionaire investor and founder of Bridgewater Associates Ray Dalio is sounding the alarm on the growing U.S. national debt. While speaking at a recent CNBC conference in Singapore, Dalio warned that the growing debt load could lead to “shocking” global developments. As a result, he emphasized that there is an urgent need for the U.S. government to reduce its federal deficit that currently sits at 7.2% of GDP.
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Dalio’s main concern is the government’s need to sell large amounts of debt to fund its spending, and it might begin to struggle to find willing buyers. If the U.S. fails to reduce its deficit, Dalio predicts that there will be significant economic problems. Therefore, he advises reducing the deficit to around 3% of GDP in order to avoid a crisis.
Interestingly, Dalio used historical examples to illustrate some of the potential consequences of the U.S. debt crisis. He suggested that the situation could lead the U.S. to pressure other nations to purchase its debt. Even worse, the U.S. may restructure its debt or even stop payments to certain creditor countries. Dalio emphasized that the world is on the brink of major changes, and a U.S. debt crisis could lead to unexpected and far-reaching developments.
Is SPY a Buy Right Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on the SPDR S&P 500 ETF Trust (SPY) based on 415 Buys, 84 Holds, and six Sells assigned in the past three months, as indicated by the graphic below. After a 17% rally in its share price over the past year, the average SPY price target of $695.28 per share implies 24.4% upside potential.
