International Paper manufactures packaging products and cellulose fibers. It accounts for roughly one third of the North American corrugated packaging market. Though it has operations in Brazil, India, and China, more than three fourths of its sales come from North America. International Paper serves a variety of end markets, including industrial, consumer products, and manufacturing.

With potential tax cuts ahead, as well as a possible slowdown in the economy that may ultimately reduce tax receipts, market participants are starting to take a closer look at U.S debt levels. They don't appear to like what they see, despite prospects for reductions in federal spending through President Trump's plan to shrink the government. In recent weeks, the yield on the benchmark Treasury 10-year bond has jumped from 4.0% to 4.5%. There is no doubt that U.S. debt levels have quietly and quickly grown over the past 10 years, and total U.S. debt is now more than 120% of GDP, according to the Office of Management and the Budget. This is the highest level since World War II. In the 1970s and 1980s, the debt/GDP ratio was consistently in the 30%-40% range, and moved up toward 60% by 2000. The debt level soared around 2010, as the government spent aggressively to slow the Great Recession and rekindle growth. (According to Keynes, that's what the government is supposed to do.) Still, despite more than 10 years of economic growth prior to the pandemic, debt only increased as a percentage of GDP. Then, reflecting the fiscal spending allocated to fight the impact of COVID-19, debt levels surged further. This is not a problem that has to be fixed today. But we note that interest expense now accounts for 3.8% of GDP, up from 2.3% in 2020 and compared to the historical average of 3.0% and a high of 5.0% in 1991. Ideally, politicians should start to establish a plan to address the issue in the next 10-15 years. If the trend persists and is not reversed, a debt debacle could result in a weak dollar and persistent hyper-inflation, which would send interest rates higher again and cut into economic growth and equity valuations.

With potential tax cuts ahead, as well as a possible slowdown in the economy that may ultimately reduce tax receipts, market participants are starting to take a closer look at U.S debt levels. They don't appear to like what they see, despite prospects for reductions in federal spending through President Trump's plan to shrink the government. In recent weeks, the yield on the benchmark Treasury 10-year bond has jumped from 4.0% to 4.5%. There is no doubt that U.S. debt levels have quietly and quickly grown over the past 10 years, and total U.S. debt is now more than 120% of GDP, according to the Office of Management and the Budget. This is the highest level since World War II. In the 1970s and 1980s, the debt/GDP ratio was consistently in the 30%-40% range, and moved up toward 60% by 2000. The debt level soared around 2010, as the government spent aggressively to slow the Great Recession and rekindle growth. (According to Keynes, that's what the government is supposed to do.) Still, despite more than 10 years of economic growth prior to the pandemic, debt only increased as a percentage of GDP. Then, reflecting the fiscal spending allocated to fight the impact of COVID-19, debt levels surged further. This is not a problem that has to be fixed today. But we note that interest expense now accounts for 3.8% of GDP, up from 2.3% in 2020 and compared to the historical average of 3.0% and a high of 5.0% in 1991. Ideally, politicians should start to establish a plan to address the issue in the next 10-15 years. If the trend persists and is not reversed, a debt debacle could result in a weak dollar and persistent hyper-inflation, which would send interest rates higher again and cut into economic growth and equity valuations.

International Paper manufactures packaging products and cellulose fibers. It accounts for roughly one third of the North American corrugated packaging market. Though it has operations in Brazil, India, and China, more than three fourths of its sales come from North America. International Paper serves a variety of end markets, including industrial, consumer products, and manufacturing.