America has officially hit a grim milestone: The US National Debt has just crossed 100% of GDP, meaning the government now owes more money than the entire American economy produces in a year.
It’s a historic milestone for all the wrong reasons, with economic experts calling it a huge wake up call.
According to fresh data from the Bureau of Economic Analysis, debt held by the public hit $31.27 trillion at the end of March, while the economy clocked in at an estimated $31.22 trillion over the same period.
To understand how the US got here, the government is spending $1.33 for every single dollar it collects in tax revenue. That puts the debt-to GDP ratio at 100.2%, a figure that carries very real consequences for ordinary Americans.
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, didn’t mince her words about what that number means.
Maya MacGuineas, president of the Committee for a Responsible Federal Budget
She said: “It’s happened – the national debt is now larger than the U.S. economy, about twice the historic average. We’ve heard plenty of alarm bells in the past few years about our fiscal path, but this one rings especially loudly.”
When was the debt last bigger than the US economy?
To put this into historical context, the US has only ever been here once before – in the immediate economic chaos following World War II, when debt peaked at a whopping 106% of GDP.
Back then, there was a pretty good reason for it: the country had just spent years fighting a horrific global conflict on two fronts.
And if nothing changes quickly, it’s going to get worse.
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