Apollo's Slok Warns $39 Trillion US Debt Jeopardizes Recession Response
Updated
Updated · Fortune · May 14
Apollo's Slok Warns $39 Trillion US Debt Jeopardizes Recession Response
1 articles · Updated · Fortune · May 14
$39 trillion in gross U.S. debt leaves the country entering any downturn with the weakest fiscal buffer in modern history, Apollo chief economist Torsten Slok said.
Sticky inflation driven by oil, tariffs and tighter labor supply limits how far the Federal Reserve can cut rates, weakening one half of the usual recession-response playbook.
Treasury has funded deficits mostly with short-term T-bills to avoid pushing up long-term yields, but Slok said that strategy cannot last because the debt must be constantly rolled over.
A recession could widen deficits by about 4% of GDP—roughly another $1.1 trillion—forcing more borrowing when investor demand may be shakier and keeping rates higher across the curve.
For investors, Slok said that means returns are less likely to come from rate-driven multiple expansion and more from earnings growth, cash generation and operational improvement.
As record debt prevents government aid, who will truly bear the cost of the next economic downturn?
With its traditional recession playbook broken, is the US economy facing a crisis with no escape?
When cheap money ends, how must companies innovate to survive and generate real growth?
U.S. National Debt at Record Highs: Systemic Risks in the Treasury Market and Policy Solutions for 2026
Overview
As of May 2026, the U.S. government saw its income rise from $3.1 trillion to $3.3 trillion compared to the previous year, while spending also increased from $4.2 trillion to $4.3 trillion. This led to a deficit of $955 billion, which is $94 billion less than last year. Despite this short-term improvement, the federal government faces ongoing fiscal challenges, with projections showing larger deficits ahead due to rising costs for Social Security, Medicare, and debt service. These trends highlight growing concerns about the long-term stability of U.S. finances and the Treasury market.