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Debt to GDP – US History

Posted by nexvucapital on December 15, 2012

With all the talk about the dire consequences of the rising Debt as a percentage of GDP we thought it would be a good time for a quick look back to the last time Debt to GDP peaked in the United States and see what followed. In the mid 1940’s the Debt to GDP ratio exceeded 100%. Over the next 3 decades the ratio declined to its most recent historical low in the early 1980’s. One asks, how was this miracle accomplished…?

US Debt to GDP

The following chart shows us that US GDP rose over 300% between 1950 and 1970. When we consider that US Debt has only increased over time (those nasty governments) it becomes obvious that the Debt to GDP ratio declined because of growth in the GDP component. One can only imagine what the economists were predicting in 1945…

US GDP 1950 to 1970

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