The United States of America now boasts a staggering $22 trillion debt – more than the USA’s entire annual economic output. $1 trillion additional debt was added to the economy in just 11 months, and $3 trillion has been added since February 2016.
The latest figures equate to a little over $61,000 per American citizen and come at the same time that credit card borrowing reaches the levels it was at just before the 2008/09 financial crisis - $870 billion.
Data from the Monthly Treasury Statement published last Wednesday show that, as of the end of December 2018, the US debt level had risen by 7.2% in the year. This compared to the 2.6% rise in 2017 is a serious concern for the American economy given that the debt has interest payments to service. In 2018 the US paid $325 billion in interest, with the Congressional Budget Office forecasting their numbers to rise to $383 billion this year and $928 billion in 10 years’ time.
This is one reason why President Trump dislikes interest rate rises from the Federal Reserve; if the rates go up, so too does the cost of repaying America’s debts, and that money is then either taken from other budgets or printed – an act of Quantitative Easing which the Federal Reserve has engaged in before (as a stimulus act) but one that risks a sharp rise for inflation.
One small mercy is that some of this debt level is intragovernmental, meaning one department owes another, but this only accounts for around $5.87 trillion of the debt held, leaving $16.1 trillion as public debt.
Not all of the blame can fall the Trump administration, however. Debt may have risen by $2 trillion since Donald Trump came to office but this is at a slower rate than Barack Obama’s first term. The difficulty in comparing the two is that the financial crisis occurred just before Obama came to office, requiring a stimulus package to restart the floundering US economy. Obama’s second term had a much slower growth of debt than Trump is currently at, but it arguably falls on George W. Bush’s head that, in his time at the helm, US debt went up by 60%.
Watch CNN News’ take on the $22 trillion milestone below, and the implications for the US: