The National Debt of the United States (Yearly)

The National Debt of the United States (Yearly)

How much the debt is in relation to the GDP, along with the major events that have influenced it? On January 31, 2022, the United States' national debt surpassed $30 trillion for the first time. It has increased over time due to economic downturns, increased expenditure on defense, and other activities that have contributed to the debt. The United States' national debt has increased to an alarming level that it now exceeds the gross domestic product (GDP), the standard measure of its annual economic activity. With time, recessions have contributed to an increase in the national debt since they have led to a decrease in tax revenue and have required Congress to spend more money to boost the economy. In addition, spending on benefits such as Medicare and the military has significantly contributed to the problem. In the years 2020 and 2021, the United States will incur additional debt due to expenditures made to mitigate the impact of the COVID-19 pandemic. Investors may get concerned that the United States will default on its debt when the size of the national debt reaches the "debt ceiling," which is the limit that Congress has established. If this happens, the government will have to either increase the limit on the amount of debt it can carry or find other ways to minimize the amount of debt it carries, such as raising taxes, cutting expenditures, and doing other things. Comparing the national debt to each year's GDP and other key events that have had an impact on the debt is one perspective from which to examine it. In the following section, we will examine the annual amount of the national debt in the United States and the factors that led to its growth over time.

Key takeaways

  • In January of 2022, the national debt of the United States of America topped $30 trillion.
  • The ratio of debt to the gross domestic product provides information about whether or not the United States can pay off all of its debt.
  • Recessions increased spending on defense, and tax cuts are all factors that have contributed to the rise in the national debt-to-GDP ratio to historic levels.
  • It would have enormous repercussions for the entire world's economy if the United States defaulted on its debts.

A year-by-year breakdown of the national debt and how to read it

It is crucial to put a country's national debt into perspective while analyzing it. It is common practice to employ expansionary fiscal policy during a recession, which can take the form of increased government expenditure and reduced tax rates. If it stimulates growth sufficiently, it may be possible to lower the debt. A flourishing economy results in increased tax revenues, which contribute to reducing the national debt. The theory of supply-side economics suggests the growth from tax reduction is enough to recoup the tax revenue lost if the tax rate is above 50 percent of income. Tax cuts make the national debt worse without increasing economic growth by enough to make up for the lost money when tax rates are lowered. The national debt may rise due to enormous catastrophes such as wars and pandemics. The United States raises the amount of money it spends on its military in a national crisis. For instance, after the events on September 11, 2001, the United States increased its expenditure on the military to initiate the War on Terror, which led to an increase in the national debt. These measures are estimated to cost $6.4 trillion between fiscal years 2001 and 2020, including increases to the Department of Defense and the Veterans Administration budgets. It is essential to evaluate the level of the national debt on an annual basis concerning the size of the economy as determined by the gross domestic product. This will give you the debt-to-gross domestic product ratio (GDP). This ratio is essential because investors worry about a default. When the debt-to-GDP ratio is more significant than 77 percent — the point investors get concerned about a default — that ratio is considered the tipping point. According to research conducted by the World Bank, a significant slowdown in economic growth occurred in the ratio of debt to GDP that remained higher than 77 percent for a lengthy period. The nation's economic growth will slow by 0.017 percentage points for every additional percentage point. The debt level remains above this level. You may also use the ratio of the national debt to the gross domestic product (GDP) to compare the national debt to that of other countries. It indicates how likely it is that the nation will be able to pay back its debt.

Comparison of yearly debt to nominal GDP and events

Because the conclusion of the fiscal year coincides with the end of the fourth quarter of each year (unless otherwise specified), the debt and GDP are reported as of the end of the fourth quarter. This is the most reliable and precise method for determining how much each fiscal year's spending contributes to the debt and how that number compares to economic growth. The comparison of the national debt to GDP and significant events since 1929 may be found in the table below. Since quarterly GDP numbers are not available, the total amount of debt is published after the second quarter for 1929 through 1946. The debt and GDP figures for the years 1947–1976 are shown after the second quarter because, during those years, the fiscal year ended on June 30. On the other hand, GDP is provided annually. The total amount of the national debt was approximately $29.6 trillion when the fourth quarter of 2021 came to a close. The debt ratio to the gross domestic product was approximately 124 percent based on the GDP figure for the fourth quarter, which was $23.9 trillion.
End of Fiscal Year Debt (rounded in billions) Ratio: Debt-to-GDP Major Events
1929 $17 16% Market crash
1930 $16 17% Smoot-Hawley reduced trade
1931 $17 22% Dust Bowl drought raged
1932 $20 34% Hoover raised taxes
1933 $23 40% New Deal increased GDP and debt
1934 $27 40%
1935 $29 39% Social Security
1936 $34 40% Tax hikes renewed depression
1937 $36 39% Third New Deal
1938 $37 42% Dust Bowl ended
1939 $40 51% Depression ended
1940 $43 49% FDR increased spending and raised taxes
1941 $49 44% U.S. entered WWII
1942 $72 48% Defense tripled
1943 $137 70%
1944 $201 91% Bretton Woods
1945 $259 114% WWII ended
1946 $269 119% Truman's 1st term budgets and recession
1947 $258 103% Cold War
1948 $252 92% Recession
1949 $253 93% Recession
1950 $257 86% Korean War boosted growth and debt
1951 $255 74%
1952 $259 71%
1953 $266 68% Recession when the war ended
1954 $271 69% Eisenhower's budgets and the Recession
1955 $274 64%
1956 $273 61%
1957 $271 57% Recession
1958 $276 58% Eisenhower's 2nd term and recession
1959 $285 55% Fed raised rates
1960 $286 54% Recession
1961 $289 52% Bay of Pigs
1962 $298 50% JFK budgets and the Cuban missile crisis
1963 $306 48% The U.S. aids Vietnam, and JFK killed
1964 $312 46% LBJ's budgets and the war on poverty
1965 $317 43% The U.S. entered Vietnam War
1966 $320 40%
1967 $326 40%
1968 $348 39%
1969 $354 36% Nixon took office
1970 $371 35% Recession
1971 $398 35% Wage-price controls
1972 $427 34% Stagflation
1973 $458 33% Nixon ended the gold standard and the OPEC oil embargo
1974 $475 31% Watergate and budget process created
1975 $533 32% Vietnam War ended
1976 $620 33% Stagflation
1977 $699 34% Stagflation
1978 $772 33% Carter budgets and recession
1979 $827 32%
1980 $908 32% Volcker raised the fed rate to 20%
1981 $998 31% Reagan tax cut
1982 $1,142 34% Reagan increased spending
1983 $1,377 37% Jobless rate 10.8%
1984 $1,572 38% Increased defense spending
1985 $1,823 41%
1986 $2,125 46% Reagan lowered taxes
1987 $2,350 48% Market crash
1988 $2,602 50% Fed raised rates
1989 $2,857 51% S&L Crisis
1990 $3,233 54% First Iraq War
1991 $3,665 58% Recession
1992 $4,065 61%
1993 $4,411 63% Omnibus Budget Act
1994 $4,693 64% Clinton budgets
1995 $4,974 64%
1996 $5,225 64% Welfare reform
1997 $5,413 63%
1998 $5,526 60% LTCM crisis and recession
1999 $5,656 58% Glass-Steagall repealed
2000 $5,674 55% Budget surplus
2001 $5,807 55% 9/11 attacks and EGTRRA
2002 $6,228 57% War on Terror
2003 $6,783 59% JGTRRA and Iraq War
2004 $7,379 60% Iraq War
2005 $7,933 61% Bankruptcy Act and Hurricane Katrina.
2006 $8,507 61% Bernanke chaired Fed
2007 $9,008 62% Bank crisis
2008 $10,025 68% Bank bailout and QE
2009 $11,910 82% Bailout cost $250B ARRA added $242B
2010 $13,562 90% ARRA added $400B, payroll tax holiday ended, Obama Tax cuts, ACA, Simpson-Bowles
2011 $14,790 95% Debt crisis, recession, and tax cuts reduced revenue
2012 $16,066 99% Fiscal cliff
2013 $16,738 99% The sequester, government shutdown
2014 $17,824 101% QE ended, debt ceiling crisis
2015 $18,151 100% Oil prices fell
2016 $19,573 105% Brexit
2017 $20,245 104% Congress raised the debt ceiling
2018 $21,516 105% Trump tax cuts
2019 $22,719 107% Trade wars
2020 $27,748 129% COVID-19 and 2020 recession
2021 $29,617 124% COVID-19 and American Rescue Plan Act

Frequently Asked Questions (FAQs)

Who is responsible for paying the national debt?

The majority of the nation's debt is held in the hands of the general populace. This includes individuals, corporations, banks affiliated with the Federal Reserve System, state and local governments, and governments from other countries. The amount of the national debt held by other departments and agencies of the federal government is referred to as "intragovernmental debt."

How is the total amount of the national debt determined?

The total of all outstanding liabilities owing by the federal government to members of the public or other agencies within the federal government is referred to as the national debt. In addition to bills, notes, and bonds issued by the Treasury, this category includes Treasury inflation-protected securities (TIPS), government account series, and other types of investments.

When exactly did the nation's debt begin to accumulate?

Since its formation in 1776, the United States of America has been burdened by a national debt. During the American Revolution, the nation took out loans to pay for the military effort.

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