Question

How does the current size of the U.S. budget deficit compare to the historical budget deficit or surplus for the time period since 1950?

Short answer

Since 2007, it has grown tremendously. The deficit to GDP ratio in 2010 was 110 percent, far higher than the historical norm of roughly 2% since 1950. In the year 2021, the deficit to GDP ratio was 12.1%.

Step-by-step solution

Step 1. Introduction

A budget deficit develops when expenditures exceed revenue, thus damaging a country's financial health. When discussing total economic spending rather than the budgets of enterprises or individuals, the term "budget deficit" is commonly used. The national debt is made up of fiscal shortfalls.

Step 2. Explanation

Since 1950, the ratio has averaged over 1% to 2% until 1983, when it grew for a while before beginning to plummet until the early 2000s. Following the 2007 financial crisis, the ratio skyrocketed to between 9% and 10%.

In the year 2021, the deficit to GDP ratio was 12.1%. While in year 202, it was 15%.