Take the Medicine

In recent years, several momentous issues affecting the global economy have come to the fore.  Conflict with Iran, tariff wars, AI uncertainty, Ukraine, and relentless climate change are often featured in the news.  All of those could have profound, lasting effects on the economic activity that keeps the world running smoothly.

But the one thing keeping most economic analysts awake at night is the federal debt, which recently surpassed $40 trillion, or $285,000 per U.S. taxpayer.

A large, accelerating federal debt raises interest costs and slows economic growth, which worsens the deficits.  It can become a vicious cycle.  Since the Great Recession of 2008/2009 and more recently during the Covid-19 era, federal debt as a percentage of GDP has grown dramatically.

Federal Debt as a Percentage of GDP:

Debt growing faster than the economy is unsustainable, and U.S. debt is already on that trajectory.  This is all happening during a period of near full employment and relative prosperity.  It is hard to envision our current crop of politicians doing anything about the situation since the solution will certainly involve cutting spending and raising taxes.  Neither action is a ticket to reelection.  Sadly, things will probably have to get much worse before we, as a nation, will resolve to take our medicine.

1 October 2026