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Fed Chair Jerome Powell warns government debt is on an unsustainable path

Federal Reserve Chairman Jerome Powell has said that US government debt is on an ‘unsustainable path’ while admitting that he underestimated the threat of inflation and warning that a recession is possible.

Powell’s remarks came in testimony before the House Financial Services Committee on Thursday, as the powerful Fed chair wrapped up a second day of appearances on Capitol Hill.

‘The US is on an unsustainable fiscal path, meaning the debt is growing faster than the economy,’ said Powell. ‘By definition, that is unsustainable.’

Powell said that for now, the US has no issue servicing its debt, and that although there is no imminent threat of default, eventually government debt will have to drop back below economic growth.  

‘We will need to get back where revenues and spending are better…

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