Government Debt Is Biggest Risk to Markets, Knapp Says

The video discusses the risks associated with debt sustainability, particularly the impact of running high deficits and government spending above historical averages. It highlights the challenges of reducing the deficit while maintaining economic growth, questioning the feasibility of significant spending cuts. The discussion also covers the role of capital spending and business confidence in shaping economic outcomes, suggesting that private sector investment could offset reduced government spending.

What is considered the biggest risk for the upcoming year according to the first section?

• Rising unemployment rates

• Debt sustainability issues

• Technological disruptions

• A potential recession

What is the historical average of government spending as a percentage of GDP since 1980?

• 24%

• 22%

• 20%

• 18%

Which risk is considered higher in the second section: a growth scare or a disorderly bond market sell-off?

• Growth scare

• Decreasing consumer confidence

• Disorderly bond market sell-off

• Rising inflation

What is necessary to boost business confidence and capital spending according to the third section?

• Increased government spending

• Tax certainty and regulatory policy

• Higher interest rates

• Reduced consumer spending

How can private sector capital spending impact economic growth if government spending is reduced?

• It can decrease productivity

• It can increase inflation

• It can offset the reduction in government spending

• It can lead to a recession