PIMCO's Gross: US debt to GDP could head towards 800%

PIMCO's Bill Gross has said US debt to GDP could accelerate towards 800% over the next five years if all actual liabilities are taken into account.

The manager of the $259bn PIMCO Total Return fund said the US debt to GDP ratio, currently standing at around 100%, could jump to 125% in the next five years if existing  trends continue. But when social security and healthcare obligations ($66trn) and unfunded local and state government liabilities ($38trn) are taken into account, the ratio will move to 800% by 2015, according to Gross. "America's debt/GDP at close to 100% is not near-term threatening, but if continued upward on trend could be absolutely debilitating," he said. "Annual deficits of 7-8%, while alleviated and temper...