Deficit and Surplus: The graph shows the US Federal Deficit adjusted for inflation over time. The deficit is how much more the federal government spends annually than it receives in revenue during that same period1. When the government spends less than it receives, it’s called a surplus.
Historical Events: The graph highlights significant historical events like World War 1 and World War 2. These events had a substantial impact on the economy and the federal budget.
Recent Trends: The graph shows a significant increase in the deficit in recent years. According to the Congressional Budget Office (CBO), the budget deficit will rise from $1.6 trillion, or 5.6% of GDP, in fiscal year 2024 to $2.6 trillion, or 6.1% of GDP, in 20341.
Debt-to-GDP Ratio: This ratio is often used to measure economic growth. A ballooning ratio could indicate a potentially destabilized economy1. The country reaches a tipping point if the ratio is more than 77%. The debt-to-GDP ratio spiked to more than 130% in 2020 and has remained above 115% since1.
Inflation: Inflation can also impact the national debt. For instance, America has inflated away $2.7 trillion of its national debt in the 14 months since President Biden took office2.
Understanding these trends and their implications can help investors make informed decisions about their investments. It’s important to keep an eye on these economic indicators as they can significantly impact the financial market, especially sectors like cryptocurrency that are sensitive to macroeconomic trends.
