Glossary

Debt-to-GDP ratio

Federal debt measured as a share of the economy's annual output, used to judge whether borrowing is sustainable.

Also called: debt-to-GDP, debt ratio

The debt-to-GDP ratio compares a government's total debt with the size of its economy, as measured by gross domestic product. Expressed as a percentage, it indicates how large the debt is relative to the country's ability to repay it, so that a larger economy can carry a larger debt.

The usual measure for the U.S. is debt held by the public, which was about 100 percent of GDP in recent years, a level reached previously only after World War II, when it peaked at over 100 percent in 1946 before falling as the economy grew. Gross debt, including intragovernmental holdings, is higher. The ratio moves with deficits, interest rates and economic growth: it rises when the economy grows more slowly than debt accumulates.

Economists disagree about what level is dangerous; research by Carmen Reinhart and Kenneth Rogoff that suggested a threshold near 90 percent drew criticism for errors and for claiming causation. Deficit hawks emphasize the rising trend and interest costs, while others emphasize that the ratio depends on growth and rates and that countries such as Japan carry higher ratios. The ratio is a central measure in discussions of the national debt and the budget deficit.

Last reviewed November 8, 2026

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Related terms

National debt The total amount the federal government owes from past borrowing, including debt held by the public and by government accounts. Budget deficit The amount by which federal spending exceeds revenue in a given year, financed by borrowing. Gross domestic product The total market value of all final goods and services produced within a country in a given period, the main measure of economic output. Crowding out The idea that government borrowing raises interest rates or uses resources that would otherwise go to private investment and spending. Unfunded liabilities Promised future benefits, such as Social Security and Medicare payments, that are not covered by dedicated funding projected to be available.