Professor Erik Hurst Concerned About Deficit’s Effect on Economy

America’s bloated budget deficit is raising concern. Numerous analysts see a slowdown of the U.S. economy as a result of continuous deficits. Hurst was among several economists quoted in an AP article “Analysts: Growing deficit hobbles economy” that appeared in BusinessWeek, Forbes and over 85 other media outlets.

What worries Erik Hurst, associate professor of economics and the John Huizinga Faculty Fellow, and other economists is the increased interest rate needed to finance the government’s debt. As the Treasury rate goes up, so do rates that affect every American—from mortgage rates to credit cards and auto loans. Businesses too would see higher costs associated with borrowing to pay for capital improvements.

High rates mean low investment. “That’s going to mean lower productivity and lower production in the future, which has a cost on society” said Hurst.

Read the article.