The No. 2 heavy-weight of the world economy, a close follower of the US economy and twice as big as Japan, is the US debt.
US government debt reached US$ 10.8 trillion (constant 2005=100) or 83.5% of real GDP in 2009. For the sake of comparison, the 11.910 trillion (current US$) national debt is a multiple of the estimated 2009 GDP of Japan of 5.049 trillion, China's 4.758 , or Germany's 3.235 (current US$ at official exchange rates).
The debt-to-GDP issue can be tracked back to 1982, when it reached the 35% (2 trillion constant US$) mark. In 2009, the problem moves into the red alarm zone, due to the pouring of US$ 3 to 4 trillion of state money in bailouts to rescue the economy (out of committed US$ 11 to 12.8 trillion, according to CNNMoney.com or Bloomberg.com), and the persistent budget haemorrhage caused by hundreds of billions spent with GWOT (global war on terror) operations every year. It is revealing that the national debt already grew by 4.1% since the end of fiscal year 2009, climbing to $12.4 trillion (current US$) on 18 February 2010.
Huge debt is not an insurmountable hurdle per se. Panic is not justified if the economy grows faster than debt, and interest rates are lower than the economy growth rate. Sadly, the economy fell in recession and remains lame, with growing unemployment and business failures. GDP is far from moving faster than debt, in fact it has decreased since 2007 in real US$ (blue line), while debt (red line) climbed to heights (83.5% of GDP) never reached after the peak of World War II (light blue dotted line, with scale on the right-hand Y-axis). The conditions for a smooth natural absorption of debt are just not there.
Considering that US budgets are heavily burdened with costly war operations and debt interest payments, and that tax income remains scarce due to the crisis, government will likely proceed with huge expense cuts and eventual tax increases. It is foreseeable that every day's life will become significantly harsher for the common people (see US debt & the financial crisis).
US National Debt & GDP compared | |||||
Year |
US National Debt |
US GDP |
Debt as % of GDP |
||
| Billion current US$ | Billion constant US$ (2005=100) |
Billion current US$ | Billion constant US$ (2005=100) |
||
| 2009 | 11,910 | 10,849 | 14,259 | 12,989 | 83.5% |
| 2008 | 10,025 | 9,241 | 14,441 | 13,312 | 69.4% |
| 2007 | 9,008 | 8,481 | 14,078 | 13,254 | 64.0% |
| 2006 | 8,507 | 8,239 | 13,399 | 12,976 | 63.5% |
| 2005 | 7,933 | 7,933 | 12,638 | 12,638 | 62.8% |
| 2004 | 7,379 | 7,625 | 11,868 | 12,264 | 62.2% |
| 2003 | 6,783 | 7,209 | 11,142 | 11,841 | 60.9% |
| 2002 | 6,228 | 6,761 | 10,642 | 11,553 | 58.5% |
| 2001 | 5,807 | 6,406 | 10,286 | 11,347 | 56.5% |
| 2000 | 5,674 | 6,401 | 9,952 | 11,226 | 57.0% |
| 1999 | 5,656 | 6,519 | 9,354 | 10,780 | 60.5% |
| 1998 | 5,526 | 6,463 | 8,794 | 10,284 | 62.8% |
| 1997 | 5,413 | 6,402 | 8,332 | 9,854 | 65.0% |
| 1996 | 5,225 | 6,288 | 7,839 | 9,434 | 66.7% |
| 1995 | 4,974 | 6,100 | 7,415 | 9,094 | 67.1% |
| 1994 | 4,693 | 5,875 | 7,085 | 8,871 | 66.2% |
| 1993 | 4,411 | 5,640 | 6,667 | 8,523 | 66.2% |
| 1992 | 4,065 | 5,311 | 6,342 | 8,287 | 64.1% |
| 1991 | 3,665 | 4,903 | 5,992 | 8,015 | 61.2% |
| 1990 | 3,233 | 4,478 | 5,801 | 8,034 | 55.7% |
| 1989 | 2,857 | 4,110 | 5,482 | 7,886 | 52.1% |
| 1988 | 2,602 | 3,885 | 5,100 | 7,614 | 51.0% |
| 1987 | 2,350 | 3,629 | 4,736 | 7,313 | 49.6% |
| 1986 | 2,125 | 3,377 | 4,460 | 7,087 | 47.7% |
| 1985 | 1,823 | 2,961 | 4,218 | 6,849 | 43.2% |
| 1984 | 1,572 | 2,631 | 3,931 | 6,577 | 40.0% |
| 1983 | 1,377 | 2,391 | 3,535 | 6,136 | 39.0% |
| 1982 | 1,142 | 2,061 | 3,253 | 5,871 | 35.1% |
| 1981 | 998 | 1,911 | 3,127 | 5,987 | 31.9% |
| 1980 | 908 | 1,901 | 2,788 | 5,839 | 32.6% |
| 1979 | 827 | 1,889 | 2,562 | 5,855 | 32.3% |
| 1978 | 772 | 1,910 | 2,294 | 5,678 | 33.6% |
| 1977 | 699 | 1,851 | 2,030 | 5,378 | 34.4% |
| 1976 | 620 | 1,748 | 1,825 | 5,141 | 34.0% |
| 1975 | 533 | 1,589 | 1,638 | 4,880 | 32.6% |
| 1974 | 475 | 1,549 | 1,500 | 4,890 | 31.7% |
| 1973 | 458 | 1,630 | 1,382 | 4,917 | 33.1% |
| 1972 | 427 | 1,604 | 1,238 | 4,648 | 34.5% |
| 1971 | 398 | 1,559 | 1,127 | 4,413 | 35.3% |
| 1970 | 371 | 1,525 | 1,038 | 4,270 | 35.7% |
| 1969 | 354 | 1,531 | 984 | 4,262 | 35.9% |
| 1968 | 348 | 1,579 | 910 | 4,133 | 38.2% |
| 1967 | 326 | 1,545 | 832 | 3,943 | 39.2% |
| 1966 | 320 | 1,562 | 788 | 3,845 | 40.6% |
| 1965 | 317 | 1,593 | 719 | 3,610 | 44.1% |
| 1964 | 312 | 1,593 | 664 | 3,392 | 47.0% |
| 1963 | 306 | 1,588 | 618 | 3,207 | 49.5% |
| 1962 | 298 | 1,564 | 586 | 3,072 | 50.9% |
| 1961 | 289 | 1,537 | 545 | 2,897 | 53.0% |
| 1960 | 286 | 1,540 | 526 | 2,831 | 54.4% |
| 1959 | 285 | 1,552 | 507 | 2,763 | 56.2% |
| 1958 | 276 | 1,525 | 467 | 2,578 | 59.2% |
| 1957 | 271 | 1,526 | 461 | 2,601 | 58.7% |
| 1956 | 273 | 1,590 | 437 | 2,550 | 62.4% |
| 1955 | 274 | 1,654 | 415 | 2,500 | 66.2% |
| 1954 | 271 | 1,663 | 380 | 2,332 | 71.3% |
| 1953 | 266 | 1,646 | 379 | 2,347 | 70.1% |
| 1952 | 259 | 1,623 | 358 | 2,244 | 72.3% |
| 1951 | 255 | 1,626 | 339 | 2,161 | 75.2% |
| 1950 | 257 | 1,757 | 294 | 2,006 | 87.6% |
| 1949 | 253 | 1,745 | 267 | 1,845 | 94.6% |
| 1948 | 252 | 1,738 | 269 | 1,854 | 93.7% |
| 1947 | 258 | 1,879 | 244 | 1,776 | 105.8% |
| 1946 | 269 | 2,173 | 222 | 1,792 | 121.2% |
| 1945 | 259 | 2,334 | 223 | 2,012 | 116.0% |
| 1944 | 201 | 1,861 | 220 | 2,035 | 91.5% |
| 1943 | 137 | 1,296 | 199 | 1,883 | 68.8% |
| 1942 | 72 | 724 | 162 | 1,618 | 44.7% |
| 1941 | 49 | 528 | 127 | 1,366 | 38.6% |
| 1940 | 43 | 494 | 101 | 1,167 | 42.4% |
| 1939 | 40 | 471 | 92 | 1,073 | 43.9% |
| 1938 | 37 | 428 | 86 | 993 | 43.2% |
| 1937 | 36 | 408 | 92 | 1,028 | 39.6% |
| 1936 | 34 | 394 | 84 | 978 | 40.3% |
| 1935 | 29 | 339 | 73 | 865 | 39.2% |
| 1934 | 27 | 326 | 66 | 794 | 41.0% |
| 1933 | 23 | 286 | 56 | 716 | 40.0% |
| 1932 | 19 | 241 | 59 | 726 | 33.2% |
| 1931 | 17 | 183 | 77 | 835 | 22.0% |
| 1930 | 16 | 158 | 91 | 893 | 17.7% |
| 1929 | 17 | 160 | 104 | 977 | 16.3% |
| Average annual change rate | 8.5% | 5.4% | 6.3% | 3.3% | 2.1% |
Sources: US Treasury, US Bureau of Economic Analysis, and CIA - The World Factbook.
