Federal Deficit Rises to 4.6% of GDP in FY2020

The news is full today with scary stories about the federal deficit approaching a trillion dollars this year. And that’s true. But as you know, money comparisons should always be presented with inflation accounted for. In this case, the equivalent method is calculating the deficit as a percentage of GDP. Here it is:

That doesn’t look quite so bad, does it? Now, it’s true that Donald Trump said it would be a piece of cake to get rid of the deficit and he hasn’t done it. It’s also true that you don’t really want to see the deficit getting bigger during an economic expansion. So this is not a great result.

Still and all, it’s not catastrophic either. Which just goes to show: adjusting for inflation is a bipartisan tool. Sometimes it makes your side look better, sometimes it makes the other side look better. Either way, it’s almost always the right way to look at things.

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