Debt casts a big shadow in the minds of most Wall Street thinkers’ as they make their 2013 forecasts, and Jim Swanson of MFS Investments warns investors not to take the complacent view of “well, we’re a lot better off than Greece and Italy.”

Swanson said during a briefing that U.S. government debt per capita is now higher than it is in Europe.

“The US is pretty much in the danger zone for debt to GDP,” he said, adding that Germany and France are right behind. He cited the warning bells sounded all year by two prominent economists, Kenneth Rogoff and Carmen Reinhart of Harvard. Both have written 100% debt to GDP is a threshold, like 32 degrees Fahrenheit, when rains turns to snow. However, Swanson said the implications are not “immediate disaster,” but rather, a reduction of the U.S. economy’s growth rate by one-third, compared to the time before the debt crisis.

He said that the U.S. economy has grown by 3.5% on average since World War II. Now the rate is 2%, a reduction of exactly one-third. He further quoted the professors as noting that they expect a series of asset collapses after a society crosses the Rubicon of 100% debt to GDP ratio. “This is what is weighing on the business cycle today,” he said.

Like everyone else on Wall Street, he is also worried about the fiscal cliff, but like many, expects policy makers to come to at least a partial compromise on some issues. He expects this to result in a fiscal bump instead, likely to shave 1.5% from growth next year.

He expects the United States to experience a mild recession in the first quarter of next year, with a growth rate of zero to one-half of a percent. But he added that markets are up, “because they’re looking past that slowdown.” The optimists are forecasting sunnier weather later in the year, thanks to several strengths, including a recovering housing sector, as well as healthy consumer spending and robust corporate profits.

His other big worry is Europe, which he said has not fixed its biggest problem, which he does not see as the alarming debt-to-GDP ratio. “The problem is unit labor costs in the southern countries” including Italy, Spain and Portugal. He said excessively high costs are the reason these countries are losing competitiveness in global business. And that leads to less tax revenue from corporations, which means less money to pay for increasingly expensive social services, which are ballooning the debt.

 “These guys are losing world export shares, and they aren’t addressing [the problem.] Fiscal cutting will not do it. They’ve got to address the unit labor cost problem,” he said.