With increased expenditures and decreased tax revenues, the debt owed by the US federal government is expected to exceed the GDP of the US in 2021, according to a government analysis.
On Wednesday, the Congressional Budget Office released the updated figures showing that the federal government’s debt is projected to be 104% of the size of the economy in fiscal year 2021. 2021 is expected to be the first time since 1946 that the amount of debt is larger than the size of the economy.
The CBO’s projection shows that the debt is expected to remain larger than the size of the economy through the upcoming decade.
For several decades following World War II, the amount of debt the US owed relative to the size of the economy decreased, bottoming out in 1974 at 23%. The US debt began increasing in the 70s and 80s as balanced budgets became more of an exception. The last time the US had a balanced budget was in 2001.
While the US debt burden decreased for most of George W. Bush’s presidency, it began to skyrocket amid the last recession.
The CBO says that while 2020 saw a slight decline in revenue, the year saw a massive increase in government spending amid the coronavirus pandemic.
To see the full analysis, click here.