The U.S. national debt moved above $30 trillion on Jan. 31, 2022. It has grown over time due to recessions, defense spending, and other programs that added to the debt. The U.S. national debt is so high that it's greater than the annual economic output of the entire country, which is measured as the gross domestic product (GDP).
Throughout the years, recessions have increased the debt because they have lowered tax revenue and Congress has had to spend more to stimulate the economy. Military spending has also been a big contributor, as has spending on benefits such as Medicare. In 2020 and 2021, spending to offset the effects of the COVID-19 pandemic also added to the debt.
When the debt gets so big that it hits the debt ceiling—the limit put in place by Congress—investors may worry that the U.S. will default on the debt. In that case, the government will need to raise the debt ceiling or reduce the debt through higher taxes, spending cuts, and more.
One way to look at the national debt is by comparing it to GDP each year, as well as other major events that have impacted it. Below, we'll dive into the U.S. national debt per year and what caused it to grow over time.
- The U.S. national debt surpassed $30 trillion in Jan. 2022.
- The debt-to-GDP ratio gives insight into whether the U.S. has the ability to cover all of its debt.
- Recessions, defense budget growth, and tax cuts have all caused the national debt-to-GDP ratio to rise to record levels.
- The U.S. cannot afford to default on its debt without major global economic consequences.
How to Look at the National Debt by Year
It's best to look at a country's national debt in context. During a recession, expansionary fiscal policy, such as spending and tax cuts, is often used to spur the economy back to health. If it boosts growth enough, it can reduce the debt. A growing economy produces more tax revenues to pay back the debt.
The theory of supply-side economics says the growth from tax cuts is enough to replace the tax revenue lost if the tax rate is above 50% of income. When tax rates are lower, the cuts worsen the national debt without boosting growth enough to replace lost revenue.
Major events, like wars and pandemics, can increase the national debt.
During national threats, the U.S. increases military spending. For example, the U.S. debt grew after the September 11, 2001, attacks as the country increased military spending to launch the War on Terror. Between fiscal years 2001 and 2020, those efforts cost $6.4 trillion, including increases to the Department of Defense and the Veterans Administration.
The national debt by year should be compared to the size of the economy as measured by the gross domestic product. (GDP) That gives you the debt-to-GDP ratio. That ratio is important because investors worry about default when the debt-to-GDP ratio is greater than 77%—that's the tipping point.
The World Bank found that if the debt-to-GDP ratio exceeded 77% for an extended period, it slowed economic growth. Every percentage point of debt above this level costs the country 0.017 percentage points in economic growth.
You can also use the debt-to-GDP ratio to compare the national debt to other countries. It gives you an idea of how likely the country is to pay back its debt.
Debt by Year, Compared to Nominal GDP and Events
In the table below, the national debt is compared to GDP and influential events since 1929. The debt and GDP are given as of the end of the fourth quarter (unless otherwise noted) in each year to coincide with the end of the fiscal year. That's the best way to accurately determine how spending in each fiscal year contributes to the debt and compare it to economic growth.
From 1947-1976, debt and GDP are given at the end of the second quarter since, during that time, the fiscal year ended on June 30. For years 1929 through 1946, debt is reported at the end of the second quarter, while GDP is reported annually, since quarterly figures are not available.
At the end of the fourth quarter in 2021, the national debt was about $29.6 trillion. Based on the fourth-quarter GDP of $23.9 trillion, the debt-to-GDP ratio was about 124%.
|End of Fiscal Year||Debt (in billions, rounded)||Debt-to-GDP Ratio||Major Events by Presidential Term|
|1930||$16||17%||Smoot-Hawley reduced trade|
|1931||$17||22%||Dust Bowl drought raged|
|1932||$20||34%||Hoover raised taxes|
|1933||$23||40%||New Deal increased GDP and debt|
|1936||$34||40%||Tax hikes renewed depression|
|1937||$36||39%||Third New Deal|
|1938||$37||42%||Dust Bowl ended|
|1940||$43||49%||FDR increased spending and raised taxes|
|1941||$49||44%||U.S. entered WWII|
|1946||$269||119%||Truman's 1st term budgets and recession|
|1950||$257||86%||Korean War boosted growth and debt|
|1953||$266||68%||Recession when war ended|
|1954||$271||69%||Eisenhower's budgets and Recession|
|1958||$276||58%||Eisenhower's 2nd term and recession|
|1959||$285||55%||Fed raised rates|
|1961||$289||52%||Bay of Pigs|
|1962||$298||50%||JFK budgets and Cuban missile crisis|
|1963||$306||48%||U.S. aids Vietnam, JFK killed|
|1964||$312||46%||LBJ's budgets and war on poverty|
|1965||$317||43%||U.S. entered Vietnam War|
|1969||$354||36%||Nixon took office|
|1973||$458||33%||Nixon ended gold standard and OPEC oil embargo|
|1974||$475||31%||Watergate and budget process created|
|1975||$533||32%||Vietnam War ended|
|1978||$772||33%||Carter budgets and recession|
|1980||$908||32%||Volcker raised fed rate to 20%|
|1981||$998||31%||Reagan tax cut|
|1982||$1,142||34%||Reagan increased spending|
|1983||$1,377||37%||Jobless rate 10.8%|
|1984||$1,572||38%||Increased defense spending|
|1986||$2,125||46%||Reagan lowered taxes|
|1988||$2,602||50%||Fed raised rates|
|1990||$3,233||54%||First Iraq War|
|1993||$4,411||63%||Omnibus Budget Act|
|1998||$5,526||60%||LTCM crisis and recession|
|2001||$5,807||55%||9/11 attacks and EGTRRA|
|2002||$6,228||57%||War on Terror|
|2003||$6,783||59%||JGTRRA and Iraq War|
|2005||$7,933||61%||Bankruptcy Act and Hurricane Katrina.|
|2006||$8,507||61%||Bernanke chaired Fed|
|2008||$10,025||68%||Bank bailout and QE|
|2009||$11,910||82%||Bailout cost $250B ARRA added $242B|
|2010||$13,562||90%||ARRA added $400B, payroll tax holiday ended, Obama Tax cuts, ACA, Simpson-Bowles|
|2011||$14,790||95%||Debt crisis, recession and tax cuts reduced revenue|
|2013||$16,738||99%||Sequester, government shutdown|
|2014||$17,824||101%||QE ended, debt ceiling crisis|
|2015||$18,151||100%||Oil prices fell|
|2017||$20,245||104%||Congress raised the debt ceiling|
|2018||$21,516||105%||Trump tax cuts|
|2020||$27,748||129%||COVID-19 and 2020 recession|
|2021||$29,617||124%||COVID-19 and American Rescue Plan Act|
Frequently Asked Questions (FAQs)
Who owns the national debt?
The public holds the largest portion of the national debt. This includes individuals, corporations, Federal Reserve Banks, state and local governments, and foreign governments. A smaller portion of the national debt, known as "intragovernmental debt," is owned by other federal agencies.
How is the national debt calculated?
The national debt is the total of all outstanding government liabilities owed to the public or intragovernmental agencies. It includes Treasury bills, notes, and bonds, as well as Treasury inflation-protected securities (TIPS), government account series, and more.
When did the national debt start?
The U.S. has carried a debt ever since its founding in 1776. The country borrowed money to fund the war effort during the American Revolution.
U.S. Department of the Treasury. “The Debt to the Penny.”
Bureau of Economic Analysis. "National Data: National Income and Product Accounts: Table 1.1.5 Gross Domestic Product."
Watson Institute for International & Public Affairs. "United States Budgetary Costs and Obligations of Post-9/11 Wars Through FY2020: $6.4 Trillion," Page 3.
World Bank Group. "Finding the Tipping Point - When Sovereign Debt Turns Bad."
U.S. Treasury. "Historical Debt Outstanding."
Federal Reserve Bank of St. Louis. "Gross Federal Debt as Percent of Gross Domestic Product."
Bureau of Economic Analysis. "Gross Domestic Product (Third Estimate), Corporate Profits (Revised Estimate), and GDP by Industry, Third Quarter 2021."
United States Treasury. "Debt to the Penny."
TreasuryDirect. "Historical Debt Outstanding—Annual."