Charts: How the US government and consumers are increasingly pumping themselves full of debt

The U.S. is still in debt. New debts. More and more, more and more. We could think that the financial crisis of 2008 was the great purifying thunderstorm. Unsustainable conditions were cleared up, and now we have finally become reasonable. But that is not the case. If you take a graphical look at the debt development for the USA, you will see that the financial crisis meant only a short pause in the debt orgy, where a few “little things” (real estate bubble burst) were temporarily cleared up. But in the meantime all this has been left behind and new record debt levels have long been reached.

Consumers in the USA continue to be in more debts

Consumers are going full throttle. The following chart shows the real estate loans issued by commercial banks (!) since 1980. The grey bars indicate recessions in the USA. It is easy to see how, after the last big grey bar (financial crisis 2008), the debt in this area declined slightly for a few years, then picked up full speed again from 2013. The peak value in 2009 was 3.88 trillion dollars. Today it is 4.49 trillion dollars.

The following chart shows the level of consumer credit in the USA since 1980. The recessions in the USA are also seen as grey bars. At the peak shortly before the financial crisis, the figure was 2.66 trillion dollars. Today the figure is a staggering 4.05 trillion dollars. The “favorable” interest rates have probably helped well!

Oh yes, by the way… the students and former students in the USA still had 1.24 trillion dollars open student loans in 2014. Now it is 1.59 trillion dollars. A steady increase over the years! The situation is similar for car loans in the USA. A steady increase over the years. While in 2014 it was still a volume of 957 billion dollars, now it is 1.16 trillion dollars.

US federal government

The debts of the US federal government are rising massively, from less than 5 trillion dollars in the 1990s to just over 22 trillion dollars today. The debt burden also exploded as a result of the financial crisis thanks to bank bailouts and the collapse of tax revenues. The fact that we are currently not yet at 22.5 trillion dollars ( what are just 500 billion dollars…?) is only due to the fact that the USA has not been incurring any new debts optically for some months now. But in fact things are continuing to go uphill. In this context, we refer you to our article on this special topic. Here is an excerpt:

On 1st of March 2019 a provisional agreement in Congress from December 2018 expired , with which it was possible to continue incurring new debts. Then it was over, and zap, they were stuck at 22.027 trillion dollars. Since then the US Treasury has been doing what it always does in such situations. Moving payments into the future, accounting tricks and much more. The debts continue to rise, but not optically for the official debt statistics. Therefore, after the next official increase of the limit, many deferred or postponed bookings will be made. In Washington, the accounting tricks with which the US government has been paying all the most, most, most necessary bills for 11 weeks are known as “extraordinary measures”. In simple words: they are book with”booking tricks” until the bitter end. In September (the end of the fiscal year), however, according to the unanimous opinions of observers in DC, the final end would probably be reached, and there would be another Government Schutdown, i.e. the closure of authorities. But sooner or later the maximum amount of debt will be raised. Then the official debt clock could jump up by 200, 300 or 400 billion dollars in one step.

Datas and Charts: Federal Reserve, Federal Reserve Bank of St. Louis, US Treasury

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