BlackRock CEO Larry Fink stated that the issue of US national debt could soon capture market attention. As US debt soars past $38 trillion, Fink believes the market is underestimating the moment when fiscal policy, rather than monetary policy, becomes a significant problem. Fink remarked, "Over the past year, especially, I've seen many headlines about the US national debt, and in the vast majority of cases, these headlines have failed to garner sufficient attention." However, these alarming headlines continue to be overshadowed by artificial intelligence, strong quarterly reports, and the political discourse of an election year. "Yet, since the debt surpassed $38 trillion last October, the discussion has begun to become more unsettling." Fink explained why the debt issue is nearing a tipping point. The importance of US national debt to the economy Think of the United States as a house with a massive mortgage. As long as your interest payments remain "manageable," you can continue to defer the debt based on trust. Over time, as the debt balance increases, even the smallest change in interest rates can lead to a substantial rise in additional interest expenses. Making matters worse, these "extra costs" are essentially used to pay for past debts. To illustrate: Interest payments on US public debt have risen sharply. It was reported that in the first quarter of fiscal year 2026 (October to December 2025), interest expenses surged by 15% to $355 billion, with an average interest rate of 3.32% (the highest level since 2009). This is tantamount to a ticking time bomb, raising numerous concerns. Interest costs are quietly escalating. The mounting debt drives up interest costs, effectively squeezing out other expenditures and forcing the government to make difficult fiscal choices. Markets react swiftly; when confidence shifts, borrowing costs will adjust rapidly. However, AI optimism, earnings season, and ongoing Federal Reserve debates continually divert attention elsewhere. Furthermore, larger fiscal deficits are impacting multiple markets. Higher borrowing costs push up interest rates, which in turn depresses stock valuations, with growth stocks being disproportionately affected. Mortgage rates typically follow Treasury yields, further impacting housing affordability (already low) and demand. In the bond market, increased issuance of Treasuries leads to higher yields, lower prices, and greater interest rate volatility. Fink: US national debt is more significant than the market believes Fink stated during an interview that the market has been focused on the Federal Reserve, with almost no discussion of fiscal discipline (as national debt rises). The hard data behind US debt: Total US debt: $38.4 trillion as of January 14, 2026; Change (from September 3, 2025, to January 14, 2026): Increased by approximately $996 billion. Fink indicated that these unsettling figures have been rising over the past year, and this trend is unlikely to change this year. However, the primary issue is confidence. He believes that the US Treasury market is the global benchmark, and if international investors begin to question the US fiscal trajectory, it could lead to a significant decline in foreign holdings of US Treasuries (this is when real pressure would begin). In such a severe scenario, inflation might remain relatively contained, but interest rates would likely rise because deficits are high, making financing more expensive. Nevertheless, Fink also pointed out that there might be a counterbalancing factor. "But I believe we are actually beginning a new growth agenda. We might see growth of 5% in the fourth quarter. If we can maintain 3% growth for the next 10 to 15 years, even though our deficits appear large, our debt-to-GDP ratio would actually shrink." Fink remains optimistic about the US economy Despite the challenges, Fink maintains strong faith in the US economy and views the current situation as largely positive. He believes the bull market narrative remains intact, but its sustainability has become more critical. Particularly for risk assets, Fink thinks investments today look much more attractive than they did a year ago. A significant reason for this is the gradual clarification of the geopolitical situation; although political and global "noise" can weigh on specific sectors, the overall economic fundamentals have improved. Growth is central to this outlook. Fink believes the US is entering a completely new phase of growth, even suggesting the economy could achieve a robust growth rate of nearly 5% in the fourth quarter. More importantly, he stated that maintaining a healthy growth rate of 3% for 10 to 15 years would significantly improve the debt-to-GDP ratio, even if deficits remain high.
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