One trillion dollars!

You may be able to just make out a person in the bottom left corner of the image standing next to 10,000 double-stacked standard pallets each holding a million $100 bills. That's what one trillion dollars looks like.

Humans have trouble intuitively conceptualizing large numbers. A billion or a trillion can seem incomprehensibly large when you only have ten fingers. This means that any analysis involving large figures will often just confuse us rather than inform us. So, for example, when we hear that the public debt of the United States is $12 trillion, or the deficit is almost $1 trillion, it sounds both overwhelming and unsustainable. And maybe it is. But drawing that conclusion without knowing the yearly GDP figures or the historical record is unjustified.

So I thought I'd show two charts that help provide a basis for drawing conclusions. Both charts provide information as percentages instead of large dollar amounts which makes any analysis easier to understand.



US public debt as a percentage of GDP

The first chart shows the US public debt as a percentage of GDP. While the debt continually increases (and is therefore larger than it ever has been), GDP also increases and is currently $17 trillion. The current US public debt as a percentage of GDP is 73% and the 1945 high was 113%.

For comparison, the UK public debt stands at 76% of GDP with a 1947 figure of 238%. Japan's public debt is currently 220% of GDP.



US federal deficit as a percentage of GDP

The second chart shows the US federal deficit as a percentage of GDP. The current US deficit is $680 million - about 4.1% of GDP. It was $1.4 trillion in 2009 or about 10% of GDP.

The US deficit was 30% of GDP in 1945.