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Debt to GDP
About This Indicator
What Is Debt to GDP?
Gross federal debt at the end of each quarter, including what the government owes its own trust funds, divided by that quarter's GDP. GDP for 1942 to 1946 is estimated from yearly figures.
Why Does It Matter?
Dollars of debt mean little without the economy that carries them, as a mortgage is heavy or light depending on the income behind it. At 100%, the debt equals a full year of everything the country produces.
Can Politics Influence It?
Every budget, tax cut, and stimulus moves the debt; growth and inflation move the economy underneath it. Wars, recessions, and pandemics move both at once.
Key Idea
The ratio can fall without any debt repaid. From 1946 to 1960 the debt barely changed, about $280 billion to $290 billion, while the ratio fell by over half as growth and inflation enlarged the economy. It also runs the other way: when the interest rate on the debt exceeds the economy's growth rate, the ratio climbs even if the government borrows only to cover interest.
Scored: A Fall Ranks Better
Source: Computed here. Federal Debt divided by GDP, from the two series above.
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