As of September 28th, the last business day of the fiscal year 2018, the Treasury Department reported that the gross national debt of the United States increased by $1.271 trillion and has topped a total of $21.5 trillion. That is a 6.3% increase that has caused the national debt to balloon to over 105% of the current GDP.
What is concerning about the debt increase is that it is occurring during a thriving economy that over the last twelve months grew by 5.4%, is within the range of full employment and interest rates are still low. Historically gross national debt increases during recessions and wars and subsequently declines. However, the current gross national debt trends show an increase by an average of over $950 billion each year from 2011 through 2017, and the recent $1.271 trillion surge in debt represents over 33% of the average debt increases over the prior seven years.
While these statistics do not necessarily indicate that another downturn is imminent, historical statistics do indicate that a run-up in debt occurs prior to most major economic recessions. It is worth considering that the current trend will likely not prove to be the exception.
Коментари