The move sparked angry protests, strikes and riots across the country as unemployment skyrocketed and the crisis spread to other European nations. The move also incited a rush to online dictionaries from those searching for a definition.
John Morse, president and publisher of the Springfield, Mass.-based dictionary, said "austerity" saw more than 250,000 searches on the dictionary's free online tool and came with more coverage of the debt crisis.
"What we look for ... what are the words that have had spikes that strike us very much as an anomaly for their regular behavior," Morse said. "The word that really qualifies this year for that is 'austerity'."
Runners-up also announced Monday included "pragmatic," ''moratorium," ''socialism," and "bigot" - the last word resulted from public uses by former British Prime Minister Gordon Brown, former CNN host Rick Sanchez and former NPR senior analyst Juan Williams.
Peter Sokolowski, Merriam-Webster's editor-at-large, said this year's top 10 words were associated with a news event or coverage, which editors believe resulted in prolonged jumps in searches.
"Sometimes it's hard to pinpoint the searches on one particular news event, but typically that is what sparks people's curiosity in a word," Sokolowski said.
For example, "socialism" was searched, editors believe, because of coverage around federal bailouts and Democratic-backed federal health care legislation. And editors noticed that "pragmatic" was looked-up a number of times after midterm elections.
According to Morse, the dictionary's online website sees more than 500 million searches a year - with most of those being usual suspects like "effect" and "affect." But he said words selected for the dictionary's top 10 were words that had searches hundreds of thousands of out-of-character hits.
Also making the top ten list was the word "doppelganger." Sokolowski said the word saw a jump in searches after George Stephanopoulos of ABC's "Good Morning America" called "Eat, Pray, Love" author Elizabeth Gilbert "Julia Roberts' doppelganger." Roberts played Gilbert in the book's film adaptation and resembles the writer.
"Doppelganger" was also used in the popular television show, "The Vampire Diaries."
"Sometimes, that all it takes," Sokolowski said.
Words "shellacking," ''ebullient," ''dissident," and "furtive" also made this year's top list.
Allan Metcalf, an English professor at MacMurray College in Jacksonville, Ill., and author of "OK: The Improbable Story of America's Greatest Word," said the list of words shows how the country is evolving because the public is looking up words that used to be very common.
"Around 20 to 30 years ago, everyone would know what 'socialism' was," said Metcalf, who is also executive secretary of the American Dialect Society. "Same with bigot. That fact that they have to be looked up says something about us."
That's true with some words like "shellacking," said Jenna Portier, an English instructor at Nicholls State University in Thibodaux, La. Although Merriam-Webster editors said searches for the word spiked after President Barack Obama said he and his party took "a shellacking" from voters in midterm election, Portier said the word is very common in southern Louisiana. "Where I'm from, it means to varnish something like wood," Portier said.
Shana Walton, a languages and literature professor also at Nicholls State University, said she understands how news events maybe influenced the dictionary's list.
"If 'moratorium' is one of the most looked-up words, that's clearly a reflection of how often the word was used in the wake of the BP oil spill," said Walton, a linguistic anthropologist who is doing research on oil and land in south Louisiana. "Many people in south Louisiana expressed much more outrage about the moratorium, frankly, than about the spill."
Metcalf said the American Dialect Society will release its "Word of the Year" winner in January, but it's selected by the group like Time's Person of the Year.