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US gross national debt equivalent to 100% of GDP, first time since 1947

Thursday, August 4th 2011 - 19:21 UTC
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The US Treasury on Tuesday added another 200 billion dollars to the debt mountain The US Treasury on Tuesday added another 200 billion dollars to the debt mountain

The United States gross debt shot up 238 billion dollars to reach 100% of GDP after the government's debt ceiling was lifted, Treasury figures showed. On Tuesday, the Treasury had to add more than 200 billion of commitments immediately after President Barack Obama signed into law an increase in the debt ceiling.

The liabilities had been temporarily taken off the federal government's balance sheet since May 16, when the US Treasury reached the 14.29 trillion dollars official cap.

It then used extraordinary measures to remain under the legal limit while deeply polarized Republicans and Democrats battled over raising the debt ceiling and reining in the country's massive deficit.

The new borrowing took total public debt to 14.58 trillion, over end-2010 GDP of 14.53 trillion, putting the United States in a league with highly indebted countries like Italy and Belgium.

Public debt subject to the official debt limit -- a slightly tighter definition -- was 14.53 trillion dollars as of the end of Tuesday, rising from the previous official cap of 14.29 trillion a day earlier.

The official limit was hiked 400 billion on Tuesday and will be increased in stages over the next 18 months.

With the latest borrowing, the United States joined a small group of countries whose public debt exceeds GDP, including Japan (229%), Greece (152%), Jamaica (137%), Lebanon (134%), Italy (120%), Ireland (114%) and Iceland (103%), according to figures provided by the International Monetary Fund.

The last time US debt exceeded its annual economy was in 1947 just after World War II. By 1981 it had fallen to 32.5%.

Ratings agencies have warned the US to reduce its net debt-to-GDP ratio quickly or facing losing its coveted AAA debt rating. Moody's said Tuesday that the government needed to stabilize the ratio at 73% by 2015 ”to ensure that the long-run fiscal trajectory remains compatible with a AAA rating.

Categories: Economy, United States.

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