High debt has become the new normal. This figure is the US federal deficit (or surplus) as a percent of the GDP going back to 1929. In the past, the US ran bigger deficits in response to a war or recession, but it was fairly restrained when the economy was growing. No more. Even with a booming economy, the deficit is still large. This is in spite of looming entitlements, shortfalls, and rising interest rates that will make so much debt much more expensive going forward.
Source: ST. LOUIS FED
Allison Schrager is a senior fellow at the Manhattan Institute. Follow her on Twitter here.
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