NEW YORK — Billionaire investor Ray Dalio is raising fresh concerns about the direction of the U.S. economy, warning that soaring national debt and trade policies are isolating America from the rest of the world.
Speaking at a media forum in New York last week, the founder of Bridgewater Associates described the country’s fiscal and economic outlook as increasingly unstable. He compared the U.S. financial system to a patient showing “critical” warning signs and cautioned investors to be wary of the bond market.
Mounting Debt, Rising Yields
Dalio pointed to the ballooning federal deficit—currently estimated at around 6.5% of GDP—as unsustainable. He explained the market is already responding, citing the recent rise in long-term bond yields following a disappointing Treasury auction. The yield of 30-year government bonds rose above 5%, its highest in over a year.
“We are getting to a point where the quantity of debt issuance is greater than what investors can comfortably take in,” Dalio said. “And that’s a serious problem.”
He added that unless Washington addresses its growing fiscal imbalance, the bond market may spiral further, leading to more volatility across global markets.
Tariffs Pushing U.S. to the Sidelines
Dalio also took aim at the return of aggressive tariff policies under former President Donald Trump. While he acknowledged that some trade protections can be useful, he said the broader approach is backfiring by encouraging other nations to do business without the United States.
“We’re watching a realignment of global trade,” he said. “Countries are building new relationships, striking deals, and increasingly doing it without involving the U.S.”
This trend, Dalio warned, could undermine the country’s influence in international markets. Instead of leading the global economy, he said, the U.S. risks being left behind.
Political Gridlock Deepens Fiscal Risk
The recent passage of Trump’s new tax-and-spending plan—nicknamed the “Big, Beautiful Bill”—has only added to market anxiety. The legislation, which cleared the House last week, is projected to increase the deficit by nearly $4 trillion over the next decade.
Dalio expressed skepticism that lawmakers will act swiftly to reverse the damage. He stated that meaningful deficit reform probably will not occur until after the 2026 midterms, at best. Even though there is bipartisan consensus that the debt must be addressed, he stated that there is no agreement on how to remedy it.
“It’s like being on a boat heading for rocks,” he said. “Everybody thinks you ought to turn, but nobody thinks you ought to turn which way.”
Markets Feeling the Impact
The warning signs are already rippling through financial markets. Treasury bonds have sold off sharply, and interest rates are climbing. Some of the biggest tech stocks have lost hundreds of billions in value as yields rose.
Dalio also criticized credit rating agencies for downplaying the risks. After Moody’s downgraded U.S. sovereign debt to Aa1, he argued that the real danger lies not in credit quality, but in the growing temptation to rely on money printing to cover spending—something that could erode investor confidence further.
“If demand for U.S. debt dries up,” he said, “there might not be enough buyers to support future borrowing.”
A Turning Point for the U.S. Economy
Ray Dalio, who has spent decades studying economic cycles and global finance, believes the United States is approaching a critical juncture. Without serious reform, he fears the country could lose its role as the center of the global financial system.
For now, markets remain on edge. With key Senate votes and more Treasury auctions on the calendar, investors are watching closely—and hoping Washington takes action before it’s too late.