January 13, 2025

The U.S. budget deficit soared to $258 billion in October. It was one of the biggest monthly deficits on record.

Debt as a percentage of economic output (gross domestic product) has increased to 121%. That means we spend $1.21 for every $1 of economic output generated.

It’s the highest level in U.S. history, except for a quick statistical blip during the COVID-19 shutdown. The debt-to-GDP ratio has doubled since the 2008 global financial crisis. During that time, federal deficit spending ballooned the debt by nearly $27 trillion.

So in 16 years, the debt has gone up $27 trillion. Any governmental efficiency efforts will certainly have their work cut out for them.

Look, I’m good with cutting government. Slashing costs would help America with its debt problem and help restore prosperity to the middle class.

However, that won’t happen without disruptions…including the stock market.

But in reality, the U.S. consumer is most at risk. The numbers since 2008 are just as bad as the government.

Credit card debt is up 214%, to $1.1 trillion. Vehicle loans doubled, up to $1.6 trillion. Student loans also doubled, reaching $1.8 trillion today. On top of that, there have been nine straight months of employment declines.

Looking at this situation broadly, there’s a rising likelihood of massive consumer debt default. Plus, as President-elect Trump attempts to cut government spending and step up student loan collections, there’s almost certainly going to be a big decline in discretionary spending.

Perhaps that will start to make a dent in the debt.