Blitz Bureau
NEW DELHI: The US national debt has surpassed the size of the economy, reaching its highest level since World War II, excluding a brief pandemic-era spike, according to new data that is sharpening concerns about the country’s long-term fiscal trajectory.
Debt held by the public reached $31.27 trillion as of March 31, slightly exceeding the nominal gross domestic product (GDP) of $31.22 trillion over the prior 12 months, pushing the debt-to-GDP ratio to 100.2 per cent, the Committee for a Responsible Federal Budget (CRFB) said in an April 30 report based on fresh figures from the Bureau of Economic Analysis.
The milestone marks a symbolic and economic threshold, with federal debt now roughly twice its historical average relative to the size of the economy. Outside of a brief distortion early in the COVID-19 pandemic— when output collapsed sharply—the United States has not ended a fiscal year with debt above 100 per cent of GDP since 1946.
Labor market conditions have remained strong, with initial jobless claims falling to 189,000, the lowest level since 1969, pointing to continued resilience in the job market.
Persistent deficits Still, analysts say persistent deficits are driving debt higher regardless of near-term economic performance.
The Government is currently spending about $1.33 for every dollar it collects, according to CRFB. Fiscal watchdogs say that without policy changes, the debt burden is likely to climb further, with CRFB projecting that debt could reach 125 per cent of GDP by 2036, a record high. Interest payments on the national debt have already reached around $1 trillion annually, becoming one of the largest components of federal spending.
