Ken Griffin: "US National Debt Interest Alone is 3.1% of GDP... Irresponsible"

"This is a concern that can never be overlooked." Ken Griffin, CEO of Citadel, known as the king of Wall Street hedge funds, directly addressed the issue of the U.S. national debt in an investor letter released for the first time since 2017. He predicted that the future economic growth rate would remain modest for several quarters.

[Image source=Reuters Yonhap News]

According to Bloomberg and other sources, Griffin CEO stated this in a letter sent to investors on the 1st (local time). Citing estimates from the Congressional Budget Office (CBO), he pointed out that net interest payments on the national debt reached 3.1% of the 2023 Gross Domestic Product (GDP). This is 1 percentage point higher than the average from 1974 to 2023.

Griffin CEO criticized, "It is irresponsible for the U.S. government to run a deficit of 6.4% (relative to GDP) while the unemployment rate remains at 3.75%," adding, "Borrowing that sacrifices future generations must be stopped." According to the Treasury Department, the U.S. fiscal deficit in February increased by 13% compared to the previous year. In particular, due to high interest rates and other factors, interest costs on the total national debt of $26 trillion are rapidly rising. The interest burden in February was $76 billion, a staggering 67% increase from a year earlier.

Along with this, Griffin CEO diagnosed that despite stronger-than-expected robust U.S. growth, the medium-term economic environment remains challenging. He said, "Due to structural and cyclical factors," adding, "(The U.S.) economic growth rate will remain at a modest level below potential growth for the next several quarters, and the central bank will continue its fight against inflationary pressures." However, he presented an optimistic outlook for the bond market. He stated that "as inflation gradually eases, especially centered on the U.S., a more favorable environment will be created for the bond market."

It is the first time since 2017 that billionaire investor and prominent Republican donor Griffin CEO has sent an investor letter. Citadel, a large hedge fund managing assets worth approximately $59 billion, recorded a return of 15.3% last year. In particular, Citadel reportedly earned more than $4 billion solely from the commodities sector. Griffin CEO emphasized that he will build "the strongest team in hedge fund history."

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