Today’s Flow of Funds report from the Federal Reserve shows that the U.S. grew its debt at the slowest rate in a decade during the third quarter of 2009.While federal and state debt exploded higher at a 20.6% and 5.1% annualized rate respectively, the private sector continued to massively deleverage.
Thus America, as a whole, is slowing its debt binge.
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The reason why we often miss this fact is that we like to focus on the government’s debt only, without also considering private individuals and companies — which are huge.
America is an economy very much driven by the private sector, thus data for the government’s balance sheet alone doesn’t give a fair picture for the health of the nation.
Federal Reserve Statistical Release 10 Dec 2009: Debt of the domestic nonfinancial sectors is estimated to have expanded at a seasonally adjusted annual rate of 2¾ per cent in the third quarter of 2009, about 1¾ percentage points slower than in the previous quarter. Private debt contracted in the third quarter, while government debt expanded.
Here’s the data, or find it all here:
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