Based on new economic data released by the Commerce Department on Thursday, the national debt topped 100% of GDP at the end of last month.
The publicly held debt was $31.265 trillion as of March 31, while GDP totaled $31.216 trillion over the preceding year, as The Wall Street Journal’s Richard Rubin points out.
That leaves the debt-to-GDP ratio at 100.2% — reaching a symbolic milestone as the United States approached the 106.1% record seen after World War II and is expected to surpass it before long. The ratio briefly touched the triple-digit mark as the economy cratered and government spending surged during the Covid-19 pandemic, but structural deficits are now expected to continue driving the debt ratio higher.
“By itself, the milestone doesn’t mean much,” Rubin writes. “There isn’t a special level where debt goes from problematic to catastrophic. And the ratio might bounce around in coming quarters as tax receipts come in, tariff refunds go out and GDP fluctuates in response to inflation and revisions.”
The trajectory is more troubling to some economists than the actual level of the debt-to-GDP ratio. “If you told me 20 years from now that the debt-to-GDP ratio was going to be 100%, I would be ecstatic,” William Gale, an economist at the Brookings Institution, told the Journal, adding, “If you just saw the economic forecast and you had confidence that political leaders could get together and solve this problem, it would calm everybody down.”
Rubin notes that just holding the ratio around 100% would require some combination of spending cuts and tax hikes totaling about $10 trillion.