The Debt Threat to the Economy

The same driving forces have propelled every strong American economic recovery since World War II: a sustained rise in business investment and increases in new-home building. The resulting increases in the demand for credit have driven up interest rates. As the current recovery builds and extraordinarily low interest rates normalize, the economy will begin to feel for the first time the effects of the unparalleled borrowing of the past decade. Exploding debt-servicing costs and the new federal borrowing could crowd out private borrowing at levels never before experienced in any of the 10 previous postwar recovers.