U.S. Deficit by Year: Compared to GDP, Increase in Debt and Events

Deficit by year
President George W. Bush (C) meets with President-elect Barack Obama (2nd-L), former President Bill Clinton (2nd-R), former President Jimmy Carter (R) and former President George H.W. Bush (L) in the Oval Office January 7, 2009 in Washington, DC. Photo by Ron Sachs-Pool/Getty Images

The U.S. budget deficit by year is how much more the federal government spends than it receives in revenue. The deficit hit a record of $1.4 trillion in the fiscal year 2009. That was due to both deficit spending to combat the 2008 financial crisis and lower tax receipts. Since then, it's declined to less than $500 billion. That's still at historically high levels. For more, see Current U.S. Budget Deficit.

Each year's deficit should be compared to the country's ability to pay it back. That's economic output as measured by GDP (Gross Domestic Production). For example, the deficit in 1945 was only $45 billion. But it was 45% of total economic output as the country geared up for World War II. The enormous $1.4 trillion deficit, at 9.8% of GDP, seems more reasonable in comparison. That is still much higher than the 2%-4% average throughout the years.

Each year's deficit adds to the national debt. Since 1987,  the deficit has been a lot less than the increase in the debt.  That's because Presidents can borrow from the Social Security Trust Fund. It has run a surplus since 1987.  Thanks to the Baby Boomer generation, there were more working people than retirees. Their payroll tax contributions were greater than Social Security spending.  The Fund invests the extra revenue in bonds. The President and Congress often spend that instead of issuing new Treasury notes.

 

In the table below, the deficit is compared to the increase in the debt, GDP, and national events since 1929. Please note that the debt and GDP are given as of the end of the third quarter (September 30) in each year. That coincides with the budget deficit's fiscal year. However, GDP in the years up to 1947 are not available for the third quarter, so year-end figures are used.

 

U.S. Deficit Since 1929 Compared to Increase in Debt, Deficit/GDP, and Major Events

Fiscal Year Deficit   (in billions)Debt Increase (by FY) Deficit /GDPEvents Affecting Deficit
1929($1)($1) (0.7%)Market Crash
1930($1)($1) (0.8%)Smoot-Hawley tariffs
1931$0$1  0.6%Dust Bowl
1932$3$3  4.5%Hoover raised taxes 
1933$3$3  4.5%FDR New Deal
1934$4$5  5.4%GDP up 10.8%
1935$3$2  3.8%Social Security. WPA.
1936$4$5  5.1%Tax hikes, budget cuts renewed depression.
1937$2$3  2.4%
1938$0$1  0.1%Depression ended.
1939$3$3  3.0%WWII began.
1940$3$3  2.8%Defense increased.
1941$5$6  3.8%US entered WWII.
1942$21$23 12.3% 
1943$55$64 26.9% 
1944$48$64 21.2% 
1945$48$58 20.8%WWII ended. Recession
1946$16$11  7.0% 
1947($4)($11) (1.6%) 
1948($12)($6) (4.2%)Recession.
1949($1)$0 (0.2%)
1950$3$5  1.0%Korean War
1951($6)($2) (1.7%) 
1952$2$4  0.4% 
1953$6$7  1.7%Korean War ended. 
1954$1$5  0.3%Recession
1955$3$3  0.7% 
1956($4)($2) (0.9%) 
1957($3)($2) (0.7%)Recession
1958$3$6  0.6% 
1959$13$8  2.4% 
1960$0$2 (0.1%)Recession. 
1961$3$3  0.6%JFK took office. Bay of Pigs. 
1962$7$10  1.2%Cuban Missile Crisis.
1963$5$7  0.7%U.S. aids Vietnam coup.  JFK killed.
1964$6$6  0.9%LBJ War on Poverty.
1965$1$6  0.2%Medicare. Medicaid. HUD
1966$4$3  0.4%Fed raised rates.
1967$9$6  1.0% 
1968$25$21  2.6% 
1969($3)$6 (0.3%)Nixon took office.
1970$3$17  0.3%Burns chairs Fed. 1st Nixon budget. 
1971$23$27  1.9%Wage price controls. Gold standard suspended.
1972$23$29  1.9%Nixon re-elected.
1973$15$31  1.8%OPEC raised oil prices.  Nixon ends gold standard. Fed raised rates. Vietnam War ended.
1974$6$17  1.0%Fed raised rates. Nixon resigned. Congress created budget process.
1975$53$58  0.4%First Ford budget. 
1976$74$87  3.1% 
1977$54$78  3.9% 
1978$59$73  2.5%First Carter budget.
1979$41$55  1.5%Volcker chairs Fed. Raised rates to 20%.
1980$74$81  2.6%Recession. Iran oil embargo.
1981$79$90  2.4%Recession.
1982$128$144  3.8%First Reagan budget. Recession.
1983$208$235  5.6%Unemployment peaked at 10.8%.
1984$185$195  4.5% 
1985$212$256  4.8% 
1986$221$297  4.8%Reagan lowered tax rates.
1987$150$225  3.1%Greenspan chairs Fed.
1988$155$252  2.9% 
1989$153$255  2.7%S&L Crisis cost $125 billion.
1990$221$376  3.7%1st Bush budget. Desert Storm.
1991$269$432  4.3%Recession.
1992$290$399  4.4% 
1993$255$347  3.7%Clinton took office. Passed Omnibus Budget Reconciliation Act.
1994$203$281  2.8%First Clinton budget.
1995$164$281  2.1% 
1996$107$251  1.3% 
1997$22$188  0.3% 
1998($69)$113 (0.8%)Surplus.
1999($126)$130 (1.3%)Surplus.
2000($236)$18 (2.3%)Surplus.
2001($128)$133 (1.2%)Surplus. 9/11 attacks. Afghanistan War=$20.89 billion.
2002$158$421  1.4%1st Bush budget. War on Terror added $13 billion.  Bush tax cuts.
2003$378$555  3.2%WOT = $81.2 billion.
2004$413$596  3.3%WOT = $94 billion.
2005$318$554  2.4%WOT = $107.6 billion.
2006$248$574  1.8%Katrina clean-up = $24.7 billion. Swine flu = $6 billion. WOT = $120.4 billion.  Bernanke chairs Fed.
2007$161$501  1.1%Iraq War cost $131.6 billion.
2008$459$1,017  3.1%WOT = $196.9 billion. Bank bailout bill = $350 billion.
2009$1,413$1,632  9.8%Military spending = $815.7 billion. Fed funds rate = 0%. Obama Stimulus Act = $241.9 billion.
2010$1,294$1,905  8.6%1st Obama budget. Obama tax cuts. ARRA = $400 billion. Defense = $851.6 billion. ACA passed. Simpson-Bowles ignored.
2011$1,300$1,229  8.3%ARRA = $120 billion. Defense = $855.1. Debt crisis. Threats to default on the debt.
2012$1,087$1,276  6.7%Fiscal cliff. Defense = $816.2 billion.
2013$679$672  4.1%Sequester. Government shutdown. Defense = $746.4 billion.
2014$485$1,086  2.8%Debt ceiling suspended. Defense = $753.6 billion. Yellen chairs Fed
2015$438$327  2.4%Debt ceiling reset to $18.113 trillion. Defense = $736.4 billion.
2016 $600$1,423  3.5%Defense = $767.3 billion to combat ISIS.
2017 $441NA  NADefense = $773.5 billion.

Resources for Table

More History