The U.S. debt crossed $40 trillion this week and the headlines were everywhere.
This chart looks at what that debt actually costs each year, going back to 1947. The chart shows federal interest payments as a share of total federal spending, with the long-term average alongside it.
Interest is running around 16% of federal spending. The average since 1947 is 15%, and it was over 23% in the early 1990s.
This chart suggests that the U.S. debt level should not change a person's financial plan.
Here are the key takeaways:
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Measuring the Interest Burden: This chart shows federal interest payments as a share of everything the federal government spends, rather than the dollar amount owed.
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A Look at the Data: Currently, federal interest payments as a share of federal spending are 16.1%. That compares to a long-term average of 15.0% since 1947.
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Investment Implications: The amount of debt owed has continued setting records. What it costs to pay the interest each year, measured against everything the government spends, has not.
