US debt record high in 2024: Currently among the most indebted countries in the world

Michael Hartnett believes that the pace of borrowing will remain at this level and that a further increase in debt from $34 to $35 trillion will occur in the short term

by Sededin Dedovic
US debt record high in 2024: Currently among the most indebted countries in the world
© Justin Sullivan / Getty Images

The debt of the United States of America (US) has reached a fascinating sum of 34.4 trillion dollars, which not only reflects the monumental economic strength of this country, but also raises questions about the long-term sustainability of this trend.

According to the latest data from the Ministry of Finance, the pace of borrowing has been accelerating since June last year and has now reached a record amount. In the last 200 days, an additional two trillion in debt was recorded, which means that each new trillion of debt was registered in just 100 days on average.

This speed of debt growth requires attention and analysis to understand the factors behind this acceleration. There are many factors that have influenced this situation, and this year the situation culminated. It is interesting to note that in the period before June last year, it took the federal government an average of eight months to increase its debt by a trillion dollars.

This is obviously much slower compared to the current pace, which begs the question of what has led to this dramatic change. Of course, when it comes to a powerful country such as the USA, this rate of borrowing arouses interest both among the domestic public and abroad.

Especially this topic gains importance due to the international circumstances in which we find ourselves, where the USA sends huge amounts of monetary value and material aid to Israel and Ukraine, which are waging war. Michael Hartnett, an investment strategist at Bank of America, predicts that the pace of borrowing will remain at this level, and that a further increase in debt from $34 to $35 trillion will occur within just 100 days.

Such predictions do not inspire much confidence, and probably everyone is aware, even ordinary citizens, of the difference in the quality of life between now and some 10 years ago. Investment Bank of America points to the need for detailed research to understand the long-term effects of this trend on the US economy and the global market.

The recent lowering of the US federal administration's credit rating from stable to negative by the Moody's investor service has further increased concerns about the very likely continuation of this trend in the future. There is a justified fear that the constant increase in debt can threaten the economic stability of the country and the global financial market, but in essence we are all aware that this has already happened and that it has a profound effect on the quality of life of ordinary citizens as well as on real estate prices in the USA.

Due to this factor, the number of homeless people in a number of the largest US cities increased to the highest extent.

An unhoused resident sleeps in an alleyway near his cleaning supplies on December 18, 2023 in Austin, Texas© Brandon Bell / Getty Images

The average home sold for $301,000 in 2021, while in 1980 the average home sold for $47,200.

The price per square meter has increased by 310% since 1980. However, it is important to note that inflation also played a role in this increase. But even when adjusted for inflation, home prices are still up about 24.6% since 1980.

That was 44 years ago, and when I compare it to the economically strong 1950s, the difference is incredible. The average house sold for $9,900 in 1950.
By 1959, the average price had risen to $12,900. Data show that the US debt in December 2024 amounted to 124.2% of the annual gross national product, which represents an increase of almost two percentage points compared to the previous quarter.

This is a very significant data that shows us that borrowing is constantly on an upward trajectory. The factors that contributed to this debt growth are numerous, and it is not the war in Gaza or Ukraine. The biggest impact was the reduction of taxes, which led to a decrease in the flow of money into the state coffers, while restrictions and costs during the pandemic put an additional burden on the budget.

Increased fiscal spending also contributed to this trend, along with a prolonged large trade deficit. The unique position of the US state when it comes to debt is an important factor to consider. Although America is one of the most indebted countries in the world, its position is specific due to the control over its own currency.

The US dollar is the world's reserve currency, which gives the US some flexibility and control over the value of its debt. While America is facing the challenges of accelerated debt growth, it is important to understand the complexity of this problem and look for sustainable solutions that will support the country's long-term economic stability because it also affects global financial security, although many world actors are not aware of it.

However, do not be fooled by this, the USA is still a superpower and the amount of debt is nothing compared to its economic power and global influence through the dollar on the world economy.