How does US debt rank compared with the rest of the world? (2024)

FAQs

How does US debt rank compared with the rest of the world? ›

According to the International Monetary Fund's (IMF) measure of central government debt, the U.S. federal government is among the most indebted governments in the world. As of 2021 (the latest available data), federal debt reached 115 percent of GDP, ranking 16^th highest out of 164 countries for which the IMF has data.

The United States has the world's largest national economy but comes in second for most indebted country. The U.S.'s steadily rising debt-to-GDP ratio hit 121.38% in 2022, making it the third-highest in our study.

How can the US be a rich country if it has such a large trade deficit? The U.S. became a rich country largely because of its trade deficit. Trade deficits exist because there is a capital surplus: more money is flowing in as investment than is flowing out as investment.

The national debt is currently almost the same size as the entire U.S. economy, which is roughly $27.3 trillion, according to a Council on Foreign Relations report, and is on track to double within the next thirty years.

Japan has the highest percentage of national debt in the world at 259.43% of its annual GDP.

One of the main culprits is consistently overspending. When the federal government spends more than its budget, it creates a deficit. In the fiscal year of 2023, it spent about $381 billion more than it collected in revenues. To pay that deficit, the government borrows money.

Thus, debt is continually paid down and new debt incurred, to be paid down by creation of new debt, ad infinitum. If total indebtedness as a percentage of the national economy does not grow, this can continue forever.

Extraordinarily low interest rates allow the U.S. to shoulder a heavier debt burden, but the debt is on an unsustainable course and its size may limit the government's ability or willingness to continue to fight the economic ill effects of the pandemic or future economic downturns.

The value of the dollar would plummet. What would happen if we paid off our trillion dollar national debt? The people that have the debit need it to receive interest on a regular basis. If the government did that, the investor would be asking for more Government debt, for many people is a safe place to put the money.

Is US debt worse than other countries? ›

As of 2023, the United States' debt-to-GDP ratio is among the highest in the developed world, behind only Japan and Italy. However, the United States has long been the world's largest economy, with no record of defaulting on its debt. Moreover, the U.S. dollar has been the world's reserve currency since the 1940s.

The biggest holder of US sovereign debt is the US Federal Reserve. The next largest block of debt holders are US corporations and individuals. Under 20% of the total debt is owned by foreign entities. All sorts of holders of U. S. Treasuries (bills, notes, bonds): private citizens.

Nearly half of all US foreign-owned debt comes from five countries. All values are adjusted to 2023 dollars. As of January 2023, the five countries owning the most US debt are Japan ($1.1 trillion), China ($859 billion), the United Kingdom ($668 billion), Belgium ($331 billion), and Luxembourg ($318 billion).

The United States is the undisputed heavyweight when it comes to the economies of the world. America's gross domestic product in 2022 was more than 40% greater than that of China, the world No. 2. Even more striking, U.S. GDP was over five times that of the next two largest economies, Japan and Germany.

Tax cuts, stimulus programs, increased government spending, and decreased tax revenue caused by widespread unemployment generally account for sharp rises in the national debt. Comparing a country's debt to its gross domestic product (GDP) reveals the country's ability to pay down its debt.

In total, other territories hold about $7.4 trillion in U.S. debt. Japan owns the most at $1.1 trillion, followed by China, with $859 billion, and the United Kingdom at $668 billion. In isolation, this $7.4 trillion amount is a lot, said Scott Morris, a senior fellow at the Center for Global Development.

The US has more assets than liabilities,¹ and much of its debt is domestically owned.

In total, other territories hold about $7.4 trillion in U.S. debt. Japan owns the most at $1.1 trillion, followed by China, with $859 billion, and the United Kingdom at $668 billion.

The $34 trillion gross federal debt equals debt held by the public plus debt held by federal trust funds and other government accounts. In very basic terms, this can be thought of as debt that the government owes to others plus debt that it owes to itself. Learn more about different ways to measure our national debt.