Ray Dalio says America will face a debt crisis

Billionaire investor Ray Dalio is closely watching the “dangerous” U.S. financial situation.

“We’re going to have a debt crisis in this country,” the founder of hedge fund Bridgewater Associates told CNBC’s Sara Eisen in an interview that aired Thursday. The pair were speaking at a fireside chat at the Managed Funds Association. “I think it depends on the supply-demand issue how quickly that happens, so I’m watching this very closely.”

U.S. debt levels topped $33 trillion for the first time this month as lawmakers negotiated a U.S. spending bill ahead of an Oct. 1 deadline. Failure to reach an agreement could mean a government shutdown and increase the perceived risk to the country’s debt.

U.S. debt levels have soared in recent years, especially after federal spending increased by about 50% between fiscal years 2019 and 2021, according to the U.S. Treasury. Investors are concerned that interest rates could continue to rise as the U.S. financial situation worsens, hurting demand for government bonds.

Dalio said he fears there are more headwinds to the economy than simply high debt levels, and that growth could fall to zero, give or take 1% or 2%.

“I think we’re going to see a meaningful slowdown in the economy,” Dalio said.