20 May 2025 | Dollar

US budget deficit to expand to $4 trillion in case of recession — Guggenheim Securities

US budget deficit to expand to $4 trillion in case of recession — Guggenheim Securities

Guggenheim Securities Co-Chair Jim Millstein believes the US could face a “fiscal disaster” in case of a recession as the government looks to cut taxes significantly. 

The US budget deficit is now $2.4 trillion, or 6.4% of GDP. It could expand to $4 trillion in the event of an economic downturn, Millstein says. The current package of tax cuts proposed by Republican lawmakers suggests consistent GDP growth. During the recent recessionary periods, the US budget deficit increased due to lower tax revenues and higher spending, the expert notes.

A key House committee has approved President Donald Trump's tax and budget package. The US Joint Committee on Taxation earlier estimated the total cost of the bill at $3.8 trillion over the next ten years, Bloomberg reports.

Millstein notes that the yield of 10-year US Treasury bonds is rising due to the imbalance in the federal government’s finances and the significant budget deficit, which has to be financed. He expects such dynamics to persist.

Elena Berseneva MarketCheese
Period: 28.11.2026 Expectation: 4200 pips
Selling EURUSD down to 1.07000
Today at 09:37 AM 5
Period: 31.12.2026 Expectation: 60 pips
Buying Tesla stock up to $450
Yesterday at 11:06 AM 20
Brent sell
Period: 10.11.2026 Expectation: 400 pips
Brent crude sell-off targets $105
Yesterday at 08:48 AM 23
Period: 09.11.2026 Expectation: 1200 pips
Go short on EURUSD with 1.10000 in sight
26 October 2026 32
Gold buy
Period: 09.11.2026 Expectation: 265 pips
Invest in gold with $4,375 in view
26 October 2026 29
Period: 23.11.2026 Expectation: 170 pips
Buy Brent crude with $120 in sight
23 October 2026 53
Go to forecasts