The continued sovereign debt issues within the Eurozone and the U.S. tax plan that will add $900 billion to the federal deficit, among other news, led me to check-in on the global debt clock from The Economist.  This is a great interactive overview of government debt across the world.

It’s hard to ignore that the U.S. has more debt than any other nation.  The absolute numbers are staggering, but it’s all relative.  The more important number is debt as a percentage of GDP – a measure of how much debt a country has as a percentage of the output in their economy.  An imperfect, but decent, comparison for you might be debt as a percentage of your income. 

The U.S. has by far the largest national debt in the world, but their debt percentage of GDP of 62.8% isn’t even close to the highest as a percentage of GDP.  Sure, they don’t match up to China’s 17.5%, but here are a few other examples:

  * US: 62.8%

  * Canada: 82%

  * Germany: 76.0%

  * India: 55.7%

  * Brazil: 59.2%

  * Japan: 196.9%

  * Iceland: 128.4%

  * Greece: 130.1%

  * Portugal: 83.8%

  * Ireland: 88.5%

  * Italy: 118.6%

  * Spain: 63.2%

  * France: 83.2%

  * Singapore: 100.1%

The U.S. debt level is high, but it’s not so bad in relative terms.  We aren’t on the brink of a crisis.  I’m not by any means endorsing the current debt levels or think we should borrow more.  Real (and perhaps painful) actions are necessary, but waiting to address the national debt in times of greater prosperity may be in our best interest.

At the same time, it’s a bit nerve-wracking that our national debt will rise to 70.3% in 2011.

Peter Lazaroff, Investment Analyst

www.acrinv.com