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Economic Trends · Sep 1st, 2026
What this video’s about
In this episode of The Market Share, Rob Romano, Director of Research at 1st Source Bank, is joined by Pete Cahill to discuss two topics that may seem very different at first: the growing U.S. national debt and a promising development in cancer treatment.
U.S. government debt has now surpassed $40 trillion, raising questions about what that level of borrowing could mean for the economy and investors. Rob and Pete put that number into context, compare today’s environment with the period following World War II, and discuss why economic growth and innovation could play an important role in addressing long-term challenges.
Putting $40 trillion into perspective
The size of the national debt can be difficult to comprehend. Pete offers one way to visualize it: If you stacked $1 bills until they totaled $40 trillion, the stack would reach the moon and back seven times!
The number has also grown quickly. U.S. government debt has roughly doubled over the past decade. But Pete explains that the total dollar amount does not tell the whole story. One useful way to assess the debt burden is to compare it with the size of the economy.
Today, U.S. government debt is approximately 122% of gross domestic product, or GDP. While that percentage has been trending higher for decades, the country has experienced comparable levels before. At the end of World War II, debt stood at roughly 119% of GDP.
That historical comparison raises an important question: Could the U.S. grow its way through today’s debt challenge as it did after the war?
Today’s debt challenge is different
Pete cautions against assuming that history will repeat itself in exactly the same way.
“As investors, one of the most dangerous phrases we can use is, ‘This time is different.’” But he also points out that today’s economic environment does differ significantly from the postwar period.
After World War II, the government used a strategy economists call financial repression. Interest rates were kept below inflation, which helped reduce the relative debt burden over time. The Federal Reserve also had less independence than it does today.
Who owns the debt has changed as well. Americans largely financed the country’s World War II debt. Today, approximately 30% of U.S. federal debt is held by investors outside the United States.
Because of these differences, Pete says most experts do not expect the U.S. to follow the same postwar playbook. A more likely path is a gradual process of managing the debt while growing the economy over time.
Why innovation matters to economic growth
The conversation then shifts from debt to innovation, but the two subjects are closely connected. Pete explains that productivity growth and innovation are important when considering how an economy can address long-term fiscal challenges.
One recent example comes from healthcare. Moderna and Merck have been working together on a personalized mRNA cancer vaccine for melanoma, one of the more difficult forms of cancer to treat. According to Pete, the treatment was tested on more than 100 patients and is tailored to the individual patient.
The development also drew a significant response from investors. Pete notes that Moderna’s stock rose more than 170% following the news, while Merck gained roughly 12%. He says the hope is that the technology could eventually be expanded to address multiple forms of cancer.
The example illustrates a broader economic point. Innovation can create new products and industries, improve productivity, and support economic growth. Those forces become increasingly important when considering challenges that may take decades rather than years to address.
Keeping long-term challenges in perspective
A $40 trillion national debt deserves attention, and Pete makes clear that our investment team is monitoring and discussing the issue. But the size of the number alone does not tell investors what comes next.
History provides useful context, even when today’s circumstances differ. The country’s ability to innovate, improve productivity, and grow its economy will also help shape how the debt burden develops over time.
Conclusion
The U.S. faces a significant long-term challenge as federal debt continues to grow. At the same time, advances in areas such as healthcare show how innovation can create opportunities for productivity and economic growth.
Keep up with The Market Share for perspective on the economic trends, market developments, and innovations that can shape the long-term investment landscape.
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