The U.S. national debt has just reached 120.5% of the nation’s annual economic output, breaking a record set in 1946 for the highest debt level in the history of the United States. The previous extreme of 118.4% stemmed from World War II, the deadliest and most widespread conflict in world history.
Today’s unprecedented debt-to-economy ratio—which is economists’ primary measure of government debt—includes $2.5 trillion in new debt since the outset of the Covid-19 pandemic. However, it doesn’t account for the vast bulk of economic damage inflicted by government-mandated business shutdowns, which will soon make the debt ratio significantly larger by decreasing its denominator. Although this decline has already begun, most of it is not yet reflected in the official data on the size of the U.S. economy.Read More