U.S. Debt Hits 100 Percent of the Country’s GDP

Just one day after the U.S. finalized a debt plan that spared the country from an embarrassing default, the Treasury Department announced that the national debt reached 100 percent of the gross domestic product (GDP). According to figures released by the department, national debt jumped significantly after the ceiling was officially lifted on Tuesday.

Debt Increases by $238 Billion

Numbers from the Treasury revealed on Wednesday that the national debt shot up $238 billion immediately after President Barack Obama signed the long-awaited deficit-reduction bill into law. The bill enforced an immediate debt ceiling increase of $2.4 trillion and also asked for significant federal spending cuts over the next few years.

Experts say the leap in public debt from $14.53 trillion to $14.58 trillion placed the United States in the same league with highly indebted countries like Italy and Belgium. In fact, the last time debt topped the size of its annual economy was in 1947, shortly after World War II.

Moody’s Assigns U.S. Negative Credit Rating Outlook

In the wake of the debt issues the United States has faced over the past several weeks, Moody’s Investors Service made true on its promise from months ago by assigning the United States a negative credit rating outlook.

The good news is the negative outlook doesn’t mean the country has an actual negative rating. For now, the U.S. has held on to is stellar AAA rating, but the rating agency said is lowering the outlook to take into account any possible future changes.

The ratings agency acknowledged that the debt plan had successfully eliminated the risk of default, but still felt that a downgrade could be necessary if the government’s fiscal discipline weakens.

In the past, both Moody’s and Standard & Poor’s noted that much of the reason for possible downgrade was the political showmanship. The agencies were disappointed that lawmakers were obviously using national debt issue as a platform to win election favor in 2012.