Can the US Grow Its Way Out of the National Debt?

Source: Independent Institute
by Craig Eyermann

“In April 2020, the size of the U.S. government’s total public debt outstanding as measured against the country’s GDP spiked up to 135% in the wake of government-mandated pandemic lockdowns. That’s the highest the U.S. national debt-to-GDP ratio has ever been, breaking the previous record of 121% set in the World War II era. 121% is about where the U.S. total national debt-to-GDP ratio is today. It’s been hovering around that level since July 2021. After initially falling rapidly after the economy was allowed to reopen in 2020, progress in lowering the national debt burden has stalled. This stagnation has occurred even though the nation’s GDP has risen. That contradicts the experience of what happened to the national debt-to-GDP ratio after World War II. It has long been held that this ratio fell rapidly because of strong economic growth. But a new working paper by Julien Acalin and Laurence M. Ball challenges that explanation.” (09/15/23)