We have frequently discussed the “one-way trip” of American debt and the long, slow slide into the “Japanification” of America.

The amount of outstanding debt, and the subsequent deficit, has long been a problem in the U.S. For the last two decades, policymakers have made annual promises for more substantial economic growth. Yet with each passing year, growth rates weaken, and economic prosperity worsens. As we discussed pre-pandemic in “Economy Should Grow Faster Than Debt:”

“The chart below shows the deficit, 10-year average GDP growth, and the annual change in Federal Debt. The problem should be obvious. Since the Federal government began ramping up debt, and running deficits, growth continues to deteriorate. Such is not a coincidence.”

American Debt, #MacroView: CBO – The “One-Way Trip” Of American Debt

“The government is already running a massive deficit. It also expects to issue another $1.5-2 Trillion in debt during the next fiscal year. The efficacy of ‘deficit spending’ in terms of its impact on economic growth has been greatly marginalized.”

Spending Without Controls

Since then, Government debt surged n response to the “Coronavirus Pandemic,” to provide fiscal support. Concurrently, the drop in economic activity has dramatically reduced Federal revenues to pay for it all.

American Debt, #MacroView: CBO – The “One-Way Trip” Of American Debt