U.S. is on brink of historical no-growth debt limit

WASHINGTON — A new report that reviewed 200 years of economic data from 44 nations has reached an ominous conclusion for the world’s largest economy: Almost without exception, countries that are as highly indebted as the United States is today grow at sub-par rates.

The report was written by two respected academic researchers who recently published a thick book on eight centuries of economic crises.

The study by Carmen Reinhart and Kenneth Rogoff — well-regarded economists from the University of Maryland and Harvard University, respectively — found statistical breaks at different points in the relationship between a country’s national debt and its gross domestic product. GDP is the broadest measure of a country’s trade in goods and services.

When a nation’s debt exceeds 60 percent of its GDP, its growth rate slows precipitously, the study found. When that ratio exceeds 90 percent, nations’ economies barely grow, and can even contract.

The U.S. national debt is at roughly 84 percent of the country’s GDP, and it is projected to cross the authors’ 90 percent threshold late this year or early next year.

The implication is stark: The authors don’t say that the U.S. economy can’t grow briskly despite even higher debt, but if it does, it would be an outlier in roughly 200 years of economic statistics.