US Economic Outlook 2019: On Borrowed Time

GAI Chief Economist Steven McDonald, CVA discusses a vexing question: Is the US economy so good today that US debt is no longer an issue? This opinion is formed through Steven’s own analyses or calculations, and the readers’ acceptance of this article is based on his expertise.


The US economy continues to reach new heights – both good and bad. By June 2019, the US economy will match its longest expansion since the end of WWII at 120 consecutive months. Employment growth remains positive and unemployment rates are at a 49-year low.

Employment growth and a tight labor market has even had the effect of bringing discouraged workers back into the labor force when so many of the oldest Baby Boomers have been exiting. So, even the slight rise in unemployment rates today is a positive economic indicator.

Growth at what cost?

But the continuation of this prosperity is borrowed, and will need to be paid back. For the first time since the end of WWII, the US owes more than it makes in a year. A 7.8% increase in total U.S. debt in 2016 pushed the nation’s level of borrowing to 104.4% of US gross domestic product (GDP).

US Debt as % of US GDP

The Great Recession in 2008 had a lot to do with the sharp jump in US debt and the country appeared eager to address the issue. But after the US “crossed the line” in 2016, there has been no looking back. Total US debt is expected to hit more than $22.5 trillion in 2019, measuring more than 105% of US GDP. By the end of 2019, the US is expected to add more than $3 trillion in total debt since 2016.

Viewing debt through the lens of today’s US economy

From an economic perspective, the biggest concern appears to be that we no longer care. A national discussion on total US debt has simply evaporated and economic policy continues to focus on reducing taxes, increasing spending, and creating an even wider trade deficit. The only conceding argument is that since the US was able to pay down its debt once before—following WWII—the nation should be able to do so again. But the differences in the US today and the post-WWII era could not be more pronounced. The US debt burden created as a result of military spending to support WWII left the US with tremendous economic capacity, and, more importantly, introduced a whole new segment to the workforce – women. So, our economic prospects for reducing debt burden over the next 40 years are not directly comparable to the post-WWII era.

Today, we have shifted to a service-based economy that has seen a natural decline in manufacturing jobs and we are continuing the phase in which Baby Boomers are leaving the workforce. Additionally, we can expect increasing prospects of an economic recession over the next few years to put further strain on the US debt level. Considering these factors and the larger national discussion, I would suggest heeding the consensus opinion of respected economists that we need to reduce debt as a portion of GDP in order to restore a truly healthy US economy.

For more information on economic research, analysis, and strategy, contact GAI Community Solutions Group’s Chief Economist Steven McDonald, CVA at 321.319.3099.


Steven McDonald, CVA is an economist, researcher, and strategist with nearly 30 years of consulting and corporate experience. He specializes in quantitative and qualitative research and analysis to include economic analyses and econometrics, business valuation, forecasting and strategic planning, revenue optimization and pricing, utility rate design, and short- and long-term financial analyses.


Steven McDonald, CVA draws his conclusions and forms his opinions through his own analyses or calculations. The readers’ acceptance of this article is based on his expertise.

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