Even Without a Recession, US Gross National Debt Hits $22.7 Trillion
The US gross national debt jumped 5.6% to $1.2 trillion in Fiscal Year 2019 to a total of $22.72 trillion. This staggering figure now represents just under 107% of current-dollar GDP and brings the total US debt per capita to just under $70,000. To put it in further financial perspective, while US gross national debt grew at 5.6% ($1.2 trillion), over the same stretch of time, the US economy grew by roughly 4% ($830 billion), as measured by nominal GDP. However, according to the Treasury Department, over the same period tax receipts increased by 3.4% while government outlays increased by 7%. What is arguably concerning is how this myriad of data is potentially tied together, particularly in considering what is fueling the economy. Taking into account that these statistics do not necessarily move in tandem, it is worth considering that if a 7% increase in government outlays outpaces a 4% increase in US economic growth which outpaces a 3.4% increase in tax receipts, a recession can arguably be averted as increased government debt fuels the continued economic expansion. The potential problem is that when a recession inevitably strikes, as the economy contracts, tax receipts can take a precipitous drop, and thanks to automatic stabilizers - unemployment insurance and welfare programs - government outlays can spike higher. What the US debt looks like now is nothing compared to what it will look like during a financial crisis. Fed Chairman Jerome Powell was quoted in 2018 as stating, "We're not on a sustainable fiscal path." That almost seems like old news.