Large US household balance sheets pose macro risks

Significance

An examination of the factors behind the expansion indicates that outsized balance sheets will persist and will pose a number of macroeconomic risks.

Impacts

• Slower workforce growth will pressure GDP growth, trade growth and long-term interest rates, unless productivity gains can offset this.
• A record number of US business deaths and births in 2020 will affect productivity and have unpredictable impacts on the economy.
• Lower growth makes it harder to stabilise debt-to-GDP ratios, just as pension and health costs rise as populations age in major economies.