With the financial crisis pushing the US into a recession, the world's largest economy is projected to see a credit loss as high as $3.1 trillion, says global consultancy firm McKinsey.
"... The total eventual credit losses in the United States are likely to be between $1.7 trillion and $2.2 trillion: at best, a rapid recovery would result in losses of $1.3 trillion; at worst, a protracted recession could see losses as high as $3.1 trillion," McKinsey said in a recent report.
Currently, American financial institutions have incurred write-offs to the tune of $1 trillion, related to the credit crisis.
McKinsey has also cautioned that credit losses could be much higher if another major asset area like "credit default swaps" collapses.
"The losses will be greater if another major asset area (such as credit default swaps) collapses or if a misguided policy response exacerbates the problems, as it did in Japan during the 1990s.
This range of possible losses represents 10-15 per cent of US GDP," the report noted.
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Last month, the country's National Bureau of Economic Research had said that the US entered into a recession in December 2007.
According to the report, the present credit crisis would cut America's real GDP by 3-7 per cent from trend growth.
"If the US economy were to follow the same path it did in the more severe crises, the total lost GDP could be two to three times greater than that estimate," McKinsey noted.