US Debt Nears WW2-Era Levels, Projected to Reach 118% of GDP by 2035
The United States’ debt held by the public is projected to rise to 118% of the GDP in 2035, while budget deficit is projected to increase to $1.9 trillion, or 6.2% of the GDP, already this year amid ample spending, the Congressional Budget Office (CBO) said on Friday.
“From 2025 to 2035, debt swells as increases in mandatory spending and interest costs outpace growth in revenues. Federal debt held by the public rises from 100 percent of GDP this year to 118 percent in 2035, surpassing its previous high of 106 percent of GDP in 1946,” the CBO said in its Budget and Economic Outlook report for 2025 to 2035.
Federal budget deficit is forecast to soar from $1.9 trillion in 2025 to $2.7 trillion by 2035, the CBO said, adding that “In 2035, the adjusted deficit equals 6.1 percent of GDP — significantly more than the 3.8 percent that deficits have averaged over the past 50 years.”
“In CBO’s projections, economic growth cools from an estimated 2.3 percent in calendar year 2024 to 1.9 percent in 2025 and 1.8 percent in 2026 amid higher unemployment and lower inflation,” the report read.
The United States has a spending problem with deficit spending reaching 6.8% of GDP, an unprecedentedly large percentage in US peacetime, President-elect Donald Trump’s Treasury chief nominee, Scott Bessent, said on Thursday.
“We have a spending problem that historically, for the past 40 or 50 years, federal government revenues have averaged about 17 to 17 and a half percentage of GDP and spending has been slightly over that, leading us to a three and a half percent budget deficit, which is manageable because we have roughly 3.8% nominal during his Senate confirmation hearing. growth, 1.8% real growth, 2% inflation,” Bessent said
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Today, the US’s federal spending is about 24-25% of GDP, Bessent noted.
“This is one of the things that got me out from behind my desk and my quiet life in this campaign, was the thought that this spending is out of control,” the nominee for the treasury secretary said.
“So as you said, 6.8-to 7% deficit. We have never seen this before when it’s not a recession or not a war,” Bessent stated.