Aretai

Higher public debt levels are associated with slower economic growth, particularly when debt ratios exceed a critical range. While the precise threshold varies across studies and contexts, the bulk of the evidence places it between 75 and 80% of GDP for advanced economies—a level that the United States has materially exceeded since 2020. This matters, not because debt is inherently destructive, but because its long-run accumulation imposes tangible costs: reduced private investment, upward pressure on interest rates, and heightened inflation and credit risk premia.

Moreover, the meta-analytic estimate indicating a 3.3 basis point decline in growth for each additional percentage point of debt-to-GDP above this threshold implies a cumulative drag that compounds meaningfully over time. Even seemingly modest reductions in growth have profound implications for future living standards, economic resilience, and fiscal space.

That’s from a paper by Jack Salmon updated twice yearly as new empirical research is released, last time on January 7. Current count is 80 studies.