U.S. National Debt Tops $40 Trillion as Economists Warn of Limited Fiscal Buffer
publishers 16articles 18first reported 23 Sep, 16:25 UTCdeveloping since 23 Sep · 7 editions
The U.S. national debt topped $40 trillion in August, more than twice China’s $18.7 trillion total, according to IMF data cited by Fortune. Although U.S. debt is lower relative to the economy than in several other countries, economists cited by the publication warned that its scale and rapid growth could restrict the government’s response to a recession.
Fortune placed the U.S. debt-to-GDP ratio at roughly 122% to 126%, compared with 207% for Japan and 172% for Singapore. Apollo chief economist Torsten Slok said U.S. debt is accumulating at about $7 billion a day, reducing room for measures such as tax cuts or infrastructure spending during a downturn. He also argued that cutting interest rates could risk higher inflation and weaken demand for newly issued government bonds.
Japan’s larger debt burden differs in structure. About 90% of Japanese government debt is held domestically by institutions including banks and insurance funds, limiting exposure to foreign investors selling bonds during global turmoil. Japan also has a household savings rate equivalent to about one-third of its GDP, roughly double the U.S. level, reducing its reliance on overseas bondholders.
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