We all know that economic growth in the US can’t last forever. In fact, some sectors of the US are already seeing a drastic slowdown. Now, Alan Greenspan – the former chairman of the Federal Reserve – said that the economy will start to “fade very dramatically” because of the growing burden of entitlement programs.
The Treasury Department expects that the deficit will exceed $1 trillion when the fiscal year ends in September. According to the Associated Press, the US budget deficit will be 15% higher than a year ago. Clearly, with the current global big picture trends and the debt load of the United States, economic growth cannot be sustained for much longer.
As the U.S. labors under the burden of growing entitlement programs and weakness around the world, economic growth won’t last, former Federal Reserve Chairman Alan Greenspan told CNBC.
The long-time central bank chief repeated his warnings about the pressure that Social Security, Medicare and other programs are placing on what have been otherwise solid gains over the past few years.
“I think the real problem is over the long run, we’ve got this significant continued drain coming from entitlements, which are basically draining capital investment dollar for dollar,” he told CNBC’s Sara Eisen during a “Squawk on the Street” interview.
“Without any major change in entitlements, entitlements are going to rise. Why? Because the population is aging. There’s no way to reverse that, and the politics of it are awful, as you well know,” Greenspan added.