Experts Sound Alarm as National Debt Tops GDP for First Time Since WWII

Debt held by the public has topped 100 percent of GDP as economists warn of rising fiscal risks despite a resilient growth backdrop.

The U.S. Capitol building on April 29, 2026. Madalina Kilroy/The Epoch Times

The U.S. national debt has surpassed the size of the economy, reaching its highest level since World War II, excluding a brief pandemic-era spike, according to new data that is sharpening concerns about the country’s long-term fiscal trajectory.

Debt held by the public reached $31.27 trillion as of March 31, slightly exceeding the nominal gross domestic product (GDP) of $31.22 trillion over the prior 12 months, pushing the debt-to-GDP ratio to 100.2 percent, the Committee for a Responsible Federal Budget (CRFB) said in an April 30 report based on fresh figures from the Bureau of Economic Analysis.

The milestone marks a symbolic and economic threshold, with federal debt now roughly twice its historical average relative to the size of the economy. Outside of a brief distortion early in the COVID-19 pandemic—when output collapsed sharply—the United States has not ended a fiscal year with debt above 100 percent of GDP since 1946.

Maya MacGuineas, president of CRFB, said the latest milestone underscores growing concerns about the country’s fiscal path.

“It’s happened—the national debt is now larger than the U.S. economy,” she said in a statement. “We’ve heard plenty of alarm bells in the past few years about our fiscal path, but this one rings especially loudly.”

Structural Pressures Build Despite Growth

The development comes as the U.S. economy continues to expand, despite warnings about the long-term sustainability of federal borrowing.

Gross domestic product rose at a 2 percent annual rate in the first quarter, rebounding from a sluggish 0.5 percent pace at the end of 2025, according to recent government data. Consumer spending, exports, and business investment contributed to the increase, even as higher energy prices linked to the Iran conflict pushed inflation higher.

The Federal Reserve’s preferred inflation gauge, the personal consumption expenditures price index, rose 3.5 percent year-on-year in March, while core inflation reached 3.2 percent, remaining above the central bank’s 2 percent target.

Labor market conditions have remained strong, with initial jobless claims falling to 189,000, the lowest level since 1969, pointing to continued resilience in the job market.

Still, analysts say persistent deficits are driving debt higher regardless of near-term economic performance. The government is currently spending about $1.33 for every dollar it collects, according to CRFB.

“The higher we allow our debt to grow, the more we erode our own prosperity and that of future generations,” MacGuineas said. “Rising debt compromises affordability by slowing income growth, pushing up interest rates, and increasing inflationary pressures.”

Douglas Holtz-Eakin, president of the American Action Forum, said recent economic data point to steady but unspectacular growth, alongside rising inflation risks.

“It is safe to say that the 1.25 percent average of the past two quarters is a reasonable estimate of the current growth trajectory, and hardly shows an economy growing gangbusters,” he wrote in a May 1 analysis, adding that the outlook includes continued expansion but “the risk of further weakening.”

Calls for Fiscal Action Intensify

Fiscal watchdogs say that without policy changes, the debt burden is likely to climb further, with CRFB projecting that debt could reach 125 percent of GDP by 2036, a record high.

MacGuineas said the current situation differs from the postwar period, when elevated borrowing reflected temporary wartime spending.

“It’s only a matter of time until we pass the all-time record of 106% reached in the immediate aftermath of World War II,” she said.

“This time the borrowing isn’t borne from a seismic global conflict, but rather a total bipartisan abdication of making hard choices.”

Rising debt could weigh on economic growth, increase interest costs, and heighten vulnerability to external shocks, she added.

Interest payments on the national debt have already reached around $1 trillion annually, becoming one of the largest components of federal spending.

Lawmakers from both parties have acknowledged the growing challenge.

Calling America’s debt level “embarrassing,” Sen. Rick Scott (R-Fla.) urged fiscal restraint.

“It’s a drag on our economy. American families are struggling, dealing with inflation and higher costs of living because of Washington’s spending addiction,” he said in an April 30 post on X.

“It’s only going to get worse until we cut up the credit cards and get serious.”

Rep. Marie Gluesenkamp Perez (D-Wash.) said the debt level underscores the need for bipartisan cooperation.

“This is a bipartisan problem, and it will require both parties to come together to fix it,” she said in an April 30 statement on social media. “It’s long past time to do something about this problem.”

Perez, along with Rep. Michael Cloud (R-Tx.) and others, has backed legislation requiring Congress to account for long-term interest costs when evaluating new spending, arguing that current budget estimates fail to capture the full fiscal impact.

CFRB has called for roughly $10 trillion in deficit reduction over the coming decade to stabilize debt relative to the economy, while endorsing “bipartisan momentum” to limit deficits to about 3 percent of GDP over time.