A new report from Ernst & Young warns that the rising U.S. national debt—set to surpass 117% of GDP by 2035—will significantly erode economic growth, jobs, and private investment, sending shockwaves across capital-intensive industries like logistics.
A detailed economic projection released by Ernst & Young (EY) in May 2025, commissioned by the Peter G. Peterson Foundation, outlines a grim fiscal trajectory for the United States, driven by sustained annual deficits exceeding $2 trillion. The analysis forecasts federal debt held by the public climbing from 100% of GDP today to 206% by 2075.
That kind of fiscal pressure doesn’t just stay in Washington. It reverberates throughout the real economy—and the logistics sector will be among the hardest hit.
Logistics Infrastructure Faces Investment Squeeze
Private investment is projected to drop by over 13% by 2035 and more than 21% by 2075 under current law, according to EY’s Quantitative Economics and Statistics (QUEST) team. For logistics companies dependent on a healthy pipeline of infrastructure development—think new ports, upgraded highways, expanded rail terminals—this pullback could delay or derail planned expansions.
The “crowding out” effect—where rising government borrowing absorbs available capital—is at the heart of the issue. As the government competes with the private sector for investment dollars, logistics firms may find themselves increasingly priced out of the credit markets, or facing steeper borrowing costs.
Fewer Jobs, Lower Wages—And Rising Costs
The EY model also forecasts that the U.S. will lose 1.2 million jobs by 2035 due to rising debt levels. In logistics—an industry employing millions in warehousing, trucking, port operations, and air freight—this contraction could tighten capacity and disrupt workforce planning.
Wages, too, are expected to take a hit. EY estimates average wage rates will fall by 0.6% in 2035 and by over 5% in 2075. For a sector already struggling with labor retention, falling wages could make logistics jobs less attractive, further exacerbating the talent crunch.
Add to that a projected $1,000 drop in income per person by 2035, and you’re looking at a consumer economy with less purchasing power—which translates to lower demand for goods movement.
Freight Volumes at Risk
Lower GDP growth—down by $340 billion in 2035—spells lower economic activity. For freight carriers, that means reduced cargo volumes and thinner margins.
By 2075, GDP could fall by as much as $1.8 trillion compared to a stabilized baseline, per the report. That contraction could mean fewer exports, lower retail imports, and less project cargo demand.
Project freight, in particular, may be vulnerable. These high-value, capital-intensive movements depend heavily on public and private investment in energy, infrastructure, and manufacturing—all sectors likely to cut back under fiscal strain.
Maritime and Port Operations Brace for Headwinds
Seaport modernization projects are typically long-cycle and high-capex. In a high-debt, high-interest-rate environment, port authorities may delay or scale back critical upgrades.
Already, ports across the Gulf Coast and Eastern Seaboard have expressed concerns about securing future funding for berth deepening, crane upgrades, and intermodal links. These projects often hinge on federal grants or public-private partnerships—both of which are likely to be impacted by tightening fiscal policy.
“The higher the debt, the tougher it becomes to unlock funding at the federal level,” said Peter Bouwhuis, a project cargo consultant. “That’s a concern for the next generation of port infrastructure in North America.”
What Comes Next?
The EY report makes clear that without policy reform, the rising federal debt will reshape the economic landscape in ways that logistics professionals cannot afford to ignore. From constrained investment and job losses to wage pressures and reduced consumer demand, the implications are deeply embedded in the sector’s operating environment.
And while these projections may stretch across decades, the effects are already being felt. For an industry built on movement, the looming drag of national debt could mean a more uncertain path ahead.
Source: pgpf
