U.S. Debt At Lowest Level Since 2006

According to a new report from Bloomberg, U.S. debt is now at it's lowest level since 2006.

Total indebtedness including that of federal and state governments and consumers has fallen to 3.29 times gross domestic product, the least since 2006, from a peak of 3.59 four years ago, according to data compiled by Bloomberg. Private- sector borrowing is down by $4 trillion to $40.2 trillion. [...]

Consumer debt declined to $11.4 trillion at the end of the second quarter, from a peak of $12.7 trillion in 2008. The market for commercial paper, a form of short-term corporate IOUs, has shrunk to $975 billion from a record $2.22 trillion in July 2007, central bank data show.

Net U.S. taxable debt issuance, which includes corporate, mortgage and Treasury securities, is forecast to fall to $821 billion in 2012, the least since 2000 and less than half the record $2.28 trillion in 2007, according to Ira Jersey, an interest-rate strategist at Credit Suisse Group AG in New York. The firm is one of 21 primary dealers that trade directly with the Fed and is obligated to bid at Treasury auctions.

According to the Congressional Budget Office, the deficit (not to be confused with the national debt) will fall below $1 trillion to $901 billion in 2013. And under the baseline established in the Budget Control Act, the deficit will almost entirely vanish by 2017.

Just as it did under President Clinton, it will take two terms of the Obama administration to return to a time of budget surpluses. But if Mitt Romney becomes president, a man who is pledging to increase defense spending by $2 trillion while cutting taxes across the board by 20 percent, you can forget the idea of a balanced budget or a budget surplus.

  • Justin Cohen

    Your blog title reads, “U.S. Debt At Lowest Level Since 2006.”

    Did you mean to say, “U.S. Deficit At Lowest Level Since 2006″?

    • bphoon

      No. The quoted Bloomberg piece begins:

      Total indebtedness including that of federal and state governments and consumers has fallen to 3.29 times gross domestic product, the least since 2006…


      the deficit (not to be confused with the national debt) will fall below $1 trillion to $901 billion in 2013.

      Remember: Federal debt=all the money the federal government borrows via selling Treasury bills. Bloomberg says that the total indebtedness, including the federal and state governments as well as consumers, is lower than it’s been since 2006.

      The deficit=the amount of money the government spends in a year versus the amount of money the government takes in each year. If the government takes in $10 but spends $12, then its deficit is $2. If it takes in $10 and spends only $8, it has a $2 surplus.

      Too many people “who should know better”, primarily news actors who apparently wouldn’t know the difference between the debt and the deficit if it bit them in the ass, do an enormous disservice when they use these terms interchangeably. No wonder so few people understand the difference.

      • Justin Cohen

        Thanks, bphoon, but I still think the title is misleading. The quoted articles starts off, “U.S. debt has shrunk to a six-year low relative to the size of the economy.”

        “The debt is at a six year low” and “the debt is at a six year low relativity to the economy” sound like two different things to me.

        For example, if I had $20,000 in debt 6 years ago when I was making an income of $40,000, and now I have $30,000 in debt but I’m making $100,000 in income, I could say that my debt is lower now than it was 6 years ago relative to my income, but it would not be accurate to say my debt now is lower than it was 6 years ago.

        Make sense?

        • bphoon

          It tends to devolve to a semantic argument. Economists commonly, at least to my understanding, refer to a country’s debt load in relation to its GDP.

  • Contrarian Rex

    yeah, and let’s not count the quadrillion in off balance sheet derivative debt….

  • Brutlyhonest

    I don’t trust the numbers. Or science. I only trust rove-produced commercials.

  • Little Face Mitt

    Just because you think you know math doesn’t mean you know the future. Just remember: Small face, small government! Believe me, America!

  • GrafZeppelin127

    I don’t think any U.S. president has ever presided over a paying down of the national debt to zero. George W. Bush could have been that president, had he continued the previous administration’s economic/fiscal policy and not allowed Congress to repeal Pay-As-You-Go rules, but he chose not to be.

    • Fagar

      George W. Bush increased the deficit by starting the war with Iraq (that was supposed to be paid for with Iraqi oil money, remember) and giving tax cuts to the rich. Medicare Part D (the prescription drug plan for senior citizens) was also added to the deficit. Our seniors richly deserved this program, but Bush should have found a way to pay for it instead of adding it to the deficit. Now, there is nothing inherently wrong with having some debt. Most of us have some debt such as mortgages, car payments, etc. The United States government also should be able to carry some debt. The point is that debt must be managed and kept from becoming overwhelming. This was not done under Bush.