National Debt & U.S. Labor Markets
09/10/2026“Our national debt is once again in the news, since it has supposedly reached a staggering $40 trillion. I say "supposedly" only because that's not really true. $40 trillion is the amount of Public Debt Outstanding, which includes $7.75 trillion of Intergovernmental Holdings (which means the debt that one branch of the government owes to another). The true measure of federal debt is Debt Held by the Public, which is now $32.3 trillion.
…I offer the following…to help one understand our national debt and its implications. …[Since 1970] federal debt has increased by an annualized rate of 8.8% per year. Note that the growth of federal debt in recent years is not very different from what it's been over the past seven decades on average.
…Federal revenues relative to GDP [as a percentage] today are only slightly lower than they have been for many decades, but federal spending is substantially higher. From this fact alone it's not a stretch to say that the main reason we have a large federal deficit is that federal government is spending very high from an historical perspective.
…When people speak about the burden of the federal debt, they usually refer to the size of the debt relative to the size of the economy. …Today federal debt is a smidgen less than the size of our economy. It's only been higher during WW II. But that's not a good measure of our debt burden. … interest payments on federal debt as a percentage of GDP, which is the correct way to measure the burden of our debt.
…Is our federal debt out of control? a ticking time bomb? No. It's still manageable, but we would all be much better off if the federal government downsized its spending and reduced our tax and regulatory burdens.” (Key Facts About Federal Debt You Might Have Missed dated 08/22/2026 by Scott Grannis, Chief Economist at Western Asset Management from 1979-2007)
U.S. Labor Market
…I offer the following…to help one understand our national debt and its implications. …[Since 1970] federal debt has increased by an annualized rate of 8.8% per year. Note that the growth of federal debt in recent years is not very different from what it's been over the past seven decades on average.
…Federal revenues relative to GDP [as a percentage] today are only slightly lower than they have been for many decades, but federal spending is substantially higher. From this fact alone it's not a stretch to say that the main reason we have a large federal deficit is that federal government is spending very high from an historical perspective.
…When people speak about the burden of the federal debt, they usually refer to the size of the debt relative to the size of the economy. …Today federal debt is a smidgen less than the size of our economy. It's only been higher during WW II. But that's not a good measure of our debt burden. … interest payments on federal debt as a percentage of GDP, which is the correct way to measure the burden of our debt.
…Is our federal debt out of control? a ticking time bomb? No. It's still manageable, but we would all be much better off if the federal government downsized its spending and reduced our tax and regulatory burdens.” (Key Facts About Federal Debt You Might Have Missed dated 08/22/2026 by Scott Grannis, Chief Economist at Western Asset Management from 1979-2007)
U.S. Labor Market
- Labor Force Participation Rate remains well below the 63.4% pre-pandemic peak, reflecting aging demographics and a smaller share of the population either working or actively seeking work. After falling to 61.4% earlier this year, participation has shown stabilization, ticking up to 61.6% in the latest data.
- “times have changed, particularly since January 2025. As we have noted several times before – right or wrong, for better or for worse – the US has shifted from an extremely loose immigration policy to an extremely tight one. And if net immigration (legal plus illegal) is roughly zero (or less!) while the native-born population ages, then the labor force is going to grow very slowly, meaning payroll growth will grow slowly, as well.”
- “Total hours worked in the private sector rose 0.3% in August and are up 1.2% from a year ago. In fact, in the past six months these hours are up at a 1.6% annual rate. This is important because it suggests the expansion in jobs should continue.” (Strong Jobs Report Raise Odds of Rate Hike dated 09/08/2026 by Brian S. Wesbury, Chief Economist, and Robert Stein CFA, Deputy Chief Economist, with First Trust Advisors LP)