Debt Hits Post-WWII Levels

In a recent article, the Washington Post reported that federal, local, and state debt levels -- including the intergovernmental debt the government owes to itself through various trust funds --  will reach a level that hasn't been seen since immediately following WWII by year's end.

Luckily, after World War II, we were able to in part grow our way out of the debt. As the article explains, though, we face a far different situation today. It says:

But today the U.S. economy is in a polar opposite condition. The labor force is aging, U.S. manufacturing often lags behind Asian and European rivals, households are in hock up to their eyeballs, and consumer appetite for goods is tepid. In addition, inflation is tame and government spending locked into entitlement programs and debt service that will be hard or impossible to alter... Moreover, today state and municipal governments are also facing fiscal woes - another difference between now and the postwar era. State and municipal governments from Sacramento to Madison to Harrisburg have racked up about $2.4 trillion in debt, or more than 15 percent of GDP.

 Here is a look at US federal, state, and local debt levels since 1945:

^{Sources: Data from OMB and Federal Reserve.}

^{Note: Data for State/Local debt is based on calendar year figures, whereas Federal and Gross debt are based on fiscal year figures.}