New Delhi, July 5 -- The United States' mounting public debt poses the biggest macroeconomic threat to its long-term economic dominance, with record deficits, rising interest costs and political gridlock threatening to erode one of the country's biggest structural advantages, according to a Deutsche Bank Research Institute thematic report.

The report, released ahead of the 250th anniversary of the US Declaration of Independence, said that while China's emergence as a global economic rival has narrowed America's lead in manufacturing and trade, "the US fiscal trajectory is the most plausible catalyst" that could accelerate a weakening of the country's economic position.

"The US fiscal trajectory is the most plausible catalyst to accelera...