U.S. public debt tops 100% of GDP for the first time in 80 years, reaching its highest level since World War II

[Financial News]  U.S. national debt stood at 100% of gross domestic product (GDP) for fiscal year 2026, which ended on September 30. It was the first time the public debt ratio had reached three digits in 80 years, since 1946, immediately after World War II.
On the 29th (local time), The Wall Street Journal (WSJ) reported that calculations based on economic growth figures for the third quarter released that day showed the $32.2 trillion in public debt held by the private sector that the U.S. government had previously reported amounted to exactly 100.03% of GDP for the full fiscal year (about 43.091 quadrillion won). That was up from 99.4% the previous year, bringing it a step closer to the all-time high of 106%, reached amid massive spending to finance World War II.
The annual budget deficit for this fiscal year was about $2 trillion, or 6.2% of GDP. It is highly unusual for such a large deficit to persist in the absence of war, a severe recession or a national emergency. This is because federal debt is growing at a pace that is catching up with the U.S. economy, even as it expanded rapidly in the third quarter.
Experts consider “debt held by the public” a more accurate measure of the nation’s fiscal burden than the often-cited total federal debt of about $40 trillion. That is because total debt includes obligations between government agencies, such as those involving Social Security funds.
The U.S. fiscal situation deteriorated rapidly beginning in the 2000s. Increases in tax revenue fueled by the late-1990s dot-com boom, combined with spending controls, brought the debt ratio down to 33.7% in 2000. At one point, former Federal Reserve Chairman Alan Greenspan was concerned about the “side effects of paying off all the debt.”
But in the years that followed, tax cuts and government spending recurred through the 2001 September 11 attacks (9/11 attacks), the 2008 financial crisis and the 2020 COVID-19 pandemic. Meanwhile, costs for Social Security and Medicare (health insurance for older adults) soared as the population aged, and the national debt snowballed.
The outlook is bleak. According to the Congressional Budget Office (CBO), the Social Security trust fund is expected to be depleted in 2032, making legally required benefit cuts unavoidable. The CBO projects that net interest costs will rise by at least 1 percentage point of GDP over the next 10 years.
These projections are conservative estimates that do not even account for current high interest rates. If rates were just 0.1 percentage point higher than the CBO’s forecast, an additional $379 billion in interest costs (about 500 trillion won) would accrue over the next 10 years.
At a recent event, CBO Director Philip Swagel said, “Many lawmakers are aware of the serious fiscal trajectory,” but pointed out, “The problem is that the United States is deeply divided politically and socially, making it very difficult to reach consensus.”
[email protected] Yoon Jae-joon Reporter