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Two tales of federal debt Why people disagree on the level of the federal debt


There’s much disagreement on whether the federal government’s debt is too high. Here are two ways of looking at this perfectly understandable question.

The top graph shows the federal debt as a share of GDP. You want to compute such a share because the federal debt over long horizons depends on the size of the economy. There’s been a marked increase in debt in response to the past recession, and it has leveled off at about 100% of annual GDP. Some consider that high. Some consider that too high.

The bottom graph multiplies the series above by the 10-year Treasury rate. This represents how much the debt costs, as a share of GDP. Here we see the cost is remarkably low—of course, thanks to low interest rates. Note that this is an approximation, as not all debt is in 10-year Treasuries and the issue dates vary greatly in the portfolio. But including other interest rates gives the same general picture. Looking from this angle, some consider the debt to be too low.

How these graphs were created: For the top graph, search for “federal debt” and the series of it as a share of GDP should be among the top choices. For the bottom graph, use the first graph and go to the “Edit Graph” section: Add a series to the first line by searching for “10-year treasury rate” and applying formula a*b/100.

Suggested by Christian Zimmermann.

View on FRED, series used in this post: GFDEGDQ188S, GS10


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