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It has been true for a few years now, but the US debt ($19.8T) now exceeds US GDP ($19.2T). The jump in debt is largely the result of fighting the Great Recession. Prior to that, debt was about 60% of GDP. The issue comes up because the US is about to reach its debt ceiling again. Without an increase in the national debt limit, the US will have to default or defer paying some bills – that’s why the ceiling on the debt limit has been regularly raised. The good news, or at least the news that moderates the bad news, is that the average interest rate on the debt has fallen from 8.8% in 1988 to 2.3% in 2017.

“Net interest payments on the debt are estimated to total $276.2 billion this fiscal year, or 6.8% of all federal outlays.” – Pew Research

Unfortunately, just as with individuals, when debt exceeds income, it becomes harder to get out of debt. The last time the US was out of debt was 1835. (That action preceded a crash in 1837; but that had more to do with mismanaging the surplus, not because surpluses are bad.) The main impact on missed payments would be inside the US. US agencies hold 27.6% of the debt. Many Americans hold debt, too, as such things as savings bonds. China and Japan hold less debt than many expect, roughly 5.8% each. While the US has managed debt for 180 years, the levels are reaching those of the governments that recently had debt crises. Those governmental debt crises were worrisome, and were from smaller governments. If the US was to enter such a critical situation, the impacts would be far greater.

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5 Facts About The National Debt” – Pew Research

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One thought on “US Debt Exceeds GDP

  1. Pingback: Data That Matters August 2017 | Pretending Not To Panic

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