The APP of Zhitong Finance has learned that Goldman Sachs Group believes that the historic expansion of US borrowing during a period of economic growth, coupled with rising bond yields, will lead to a surge in interest service costs in the US.

Goldman Sachs Group's economic analysis team, led by Jan Hatzius, believes that the current US spending and tax plans will make the US fiscal deficit out of control and fall into a debt dilemma that has never been seen before.

In the past, Congress responded by raising taxes and cutting spending as the economy grew and its debt burden increased, Hatzius said in a report released on February 18th. But this time, the opposite has happened. The US Congress passed spending increases and tax cuts twice last month, which will greatly increase the US budget deficit, and the US economy does not need such stimulus measures at all.

The report estimates that the average maturity of US debt is close to six years, so it will take a while for yields to rise to higher borrowing rates paid by the Treasury than the growth rate of gross domestic product. When that happens, the debt-to-GDP ratio will rise further from about 77 per cent, which is already high. If the current fiscal policy is extended, Goldman Sachs Group predicts that by 2027, US net interest expenditure relative to GDP will exceed the levels of the 1980s and early 1990s. The debt-to-GDP ratio could exceed 100%, putting America's fiscal position in a worse position than it did in the 1940s or 1990s.

In terms of the next few years, Goldman Sachs Group expectsThe US fiscal deficit will rise to 5.2% of GDP in 2019, and then continue to rise significantly.. Goldman Sachs Group estimates that the US economy will grow by an additional 0.7 per cent in 2018 and 0.6 per cent in 2019 as a result of expansionary policies, but there will be no additional increases thereafter because of a possible change in congressional control after the 2018 mid-term elections, slowing growth.

In addition, recentlyGoldman Sachs Group raised his forecast for the 10-year Treasury yield to 3.25% from 3% at the end of the year, saying the valuation was still too high..