- US Economy
- Fiscal Policy
ByKimberly Amadeo
Updated on January 18, 2023
Reviewed by
Robert C. Kelly
:max_bytes(150000):strip_icc()/ScreenShot2020-03-23at2.04.43PM-59de96b153e540c498f1f1da8ce5c965.png "US National Debt by Year (1)")
Reviewed byRobert C. Kelly
Robert Kelly is managing director of XTS Energy LLC, and has more than three decades of experience as a business executive. He is a professor of economics and has raised more than $4.5 billion in investment capital.
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Fact checked byEmily Ernsberger
In This Article
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In This Article
- How To Look at the National Debt by Year
- Debt by Year, Compared to Nominal GDP and Events
- Frequently Asked Questions (FAQs)
:max_bytes(150000):strip_icc()/young-woman-having-a-coffee-in-her-apartment-while-browsing-the-web-on-tablet-1135396167-048e19f9c53744b4bc1b723a0e92403e.jpg "US National Debt by Year (2)")
Key Takeaways
- The U.S. national debt was more than $31.42 trillion in December 2022.
- The debt-to-GDP ratio gives insight into whether the U.S. has the ability to cover all of its debt.
- Recessions, defense budget growth, and tax cuts have all caused the national debt-to-GDP ratio to rise to record levels.
- The U.S. cannot afford to default on its debt without major global economic consequences.
The U.S. national debt grew to a record $31.42 trillion in by the end of 2022. It has grown over time due to recessions, defense spending, and other programs that added to the debt. The U.S. national debt is so high that it's greater than the annual economic output of the entire country, which is measured as the gross domestic product (GDP).
How To Look at the National Debt by Year
It's best to look at a country's national debt in context. During a recession, expansionary fiscal policy, such as spending and tax cuts, is often used to spur the economy back to health. If it boosts growth enough, it can reduce the debt. A growing economy produces more tax revenues to pay back the debt.
The theory ofsupply-side economicssays the growth from tax cuts is enough to replace the tax revenue lost if the tax rate is above 50% of income. When tax rates are lower, the cuts worsen the national debt without boosting growth enough to replace lost revenue.
Note
Major events, like wars and pandemics, can increase the national debt.
During national threats, the U.S. increases military spending. For example, the U.S. debt grew after theSeptember 11, 2001, attacksas the country increased military spending to launch the War on Terror. Between fiscal years 2001 and 2020, those efforts cost $6.4 trillion, including increases to the Department of Defense and the Veterans Administration.
The national debt by year should be compared to the size of the economy as measured by the gross domestic product. (GDP) That gives you thedebt-to-GDP ratio. That ratio is important because investors worry about default when the debt-to-GDP ratio is greater than 77%—that's the tipping point according to the World Bank.
The World Bank found that if the debt-to-GDP ratio exceeded 77% for an extended period, it slowedeconomic growth. Every percentage point of debt above this level costs the country 0.017 percentage points in economic growth.
You can also use the debt-to-GDP ratio to compare the national debt to other countries. It gives you an idea of how likely the country is to pay back its debt.
Debt by Year, Compared to Nominal GDP and Events
In the table below, the national debt is compared to GDP and influential events since 1929. The debt and GDP are given as of the end of the fourth quarter (unless otherwise noted) in each year to coincide with the end of the fiscal year. That's the best way to accurately determine how spending in each fiscal year contributes to the debt and compare it to economic growth.
From 1947-1976, debt and GDP are given at the end of the second quarter since, during that time, the fiscal year ended on June 30. For years 1929 through 1946, debt is reported at the end of the second quarter, while GDP is reported annually, since quarterly figures are not available.
Note
At the end of the second quarter in 2022, the national debt was about $30.6 trillion. Based on the second-quarter GDP of $24.9 trillion, the debt-to-GDP ratio was about 123%.
| End of Fiscal Year | Debt (in billions, rounded) | Debt-to-GDP Ratio | Major Events by Presidential Term |
|---|---|---|---|
| 1929 | $17 | 16% | Market crash |
| 1930 | $16 | 17% | Smoot-Hawleyreduced 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 war ended |
| 1954 | $271 | 69% | Eisenhower's budgets and 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 Cuban missile crisis |
| 1963 | $306 | 48% | U.S. aids Vietnam, JFK killed |
| 1964 | $312 | 46% | LBJ's budgets and war on poverty |
| 1965 | $317 | 43% | 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 gold standard andOPEC 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 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 crisisand recession |
| 1999 | $5,656 | 58% | Glass-Steagall repealed |
| 2000 | $5,674 | 55% | Budget surplus |
| 2001 | $5,807 | 55% | 9/11 attacksandEGTRRA |
| 2002 | $6,228 | 57% | War on Terror |
| 2003 | $6,783 | 59% | JGTRRAandIraq War |
| 2004 | $7,379 | 60% | Iraq War |
| 2005 | $7,933 | 61% | Bankruptcy Actand HurricaneKatrina. |
| 2006 | $8,507 | 61% | Bernanke chaired Fed |
| 2007 | $9,008 | 62% | Bank crisis |
| 2008 | $10,025 | 68% | Bank bailoutandQE |
| 2009 | $11,910 | 82% | Bailout cost $250BARRA 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% | 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-19and 2020 recession |
| 2021 | $29,617 | 124% | COVID-19 and American Rescue Plan Act |
| 2022 | $30,824 | 123% | Inflation Reduction Act and student loan forgiveness |
Frequently Asked Questions (FAQs)
Who owns the national debt?
The public holds the largest portion of the national debt. This includes individuals, corporations, Federal Reserve banks, state and local governments, and foreign governments. A smaller portion of the national debt, known as "intragovernmental debt," is owned by other federal agencies.
How is the national debt calculated?
The national debt is the total of all outstanding government liabilities owed to the public or intragovernmental agencies. It includes Treasury bills, notes, and bonds, as well as Treasury inflation-protected securities (TIPS), government account series, and more.
When did the national debt start?
The U.S. has carried a debt ever since its founding in 1776. The country borrowed money to fund the war effort during the American Revolution.
Updated byHilarey Gould
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Sources
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
U.S. Department of the Treasury. “The Debt to the Penny.”
Bureau of Economic Analysis. "National Data: National Income and Product Accounts: Table 1.1.5 Gross Domestic Product."
Watson Institute for International & Public Affairs. "United States Budgetary Costs and Obligations of Post-9/11 Wars Through FY2020: $6.4 Trillion," Page 3.
World Bank Group. "Finding the Tipping Point - When Sovereign Debt Turns Bad."
U.S. Treasury. "Historical Debt Outstanding."
Office of Management and Budget and Federal Reserve Bank of St. Louis via Federal Reserve Economic Data (FRED). "Gross Federal Debt as Percent of Gross Domestic Product."
Bureau of Economic Analysis. "Gross Domestic Product (Third Estimate), Corporate Profits (Revised Estimate), and GDP by Industry, Third Quarter 2021."
United States Treasury. "Debt to the Penny."
TreasuryDirect. "Historical Debt Outstanding—Annual."
Part Of
The National Debt
- The US National Debt and How It Affects You1 of 13
- How Did the U.S. National Debt Get So Big?2 of 13
- US Debt Ceiling and Its Current Status3 of 13
- US National Debt Clock: How Its Warning Affects You4 of 13
- Who Owns the US National Debt?5 of 13
- What Is the Public Debt, and When Is It Too High?6 of 13
- U.S. Debt to China: How Much Is It, and Why?7 of 13
- Interest on the National Debt and How It Affects You8 of 13
- US National Debt by Year9 of 13
- US Debt by President: By Dollar and Percentage10 of 13
- U.S. Budget Deficit by Year11 of 13
- Will the U.S. Ever Pay Off Its Debt?12 of 13
- Will the US Ever Default on Its Debt? 13 of 13
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