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FACT BRIEF

Is the American federal debt growing like never before?

By Gabriel Vinocur
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NO

The relevant statistic is federal debt held by the public as a percent of GDP; debt held by the public because other debt is what one government agency owes another, and percent of GDP because that captures the economy’s capacity. Between the 2020 Quarter 1 and 2024 Quarter 2 the federal debt held by the public relative to GDP rose 17 percentage points (from 79.4 percent to 96.4 percent). The peak was in the 2020 Quarter 2 when this was 103.2 percent of GDP – so this ratio fell 6.8 percentage points in 2 years.  But between 2008 Quarter 2 and 2012 Quarter 3, also a four-and-one-quarter year period, the federal debt held by the public relative to GDP rose 33.5 percentage points (from 35.6 percent to 69.1 percent).  Both of these periods began with a crisis – the 2008 economic and financial crisis and the COVID pandemic.  

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Sources
FRED (Federal Reserve Bank Of St. Louis) Federal Debt Held by the Public as Percent of Gross Domestic Product (FYGFGDQ188S)
Fiscal Data from the U.S. Treasury Department What is the National Debt?
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