Saturday, August 7, 2010

Public v Private (2)

While we're looking at debt by sector, here's a longer-term and slightly revised version of the graph from yesterday's post:

That vertical-axis label is supposed to say "Debt in Billions" just like yesterday's graph, but I couldn't get it legible this time for some reason.

There are only three trend-lines this time. I combined financial and non-financial debt together into one line for business debt. That's the red line here. The gold line is government debt -- again, federal combined with state and local. The blue line, as before, is household debt.

What do we see here? Business debt is the largest and fastest-growing component. Total government debt runs neck-and-neck with total household debt, tied for second place from 1975 until the mid-1990s when (as we saw yesterday) government debt growth slowed. The blue line, showing household debt, continued its upward trend with no such slowing evident.

From about 2000, government debt resumed an upward trend. But it increased more slowly than household debt, and both increased more slowly than business debt until we approached the Paulson crisis.

The crisis upon us, household debt flattened in 2008 and fell slightly in 2009. Business debt slowed in 2008 and fell sharply in 2009. And government debt grew sharply in 2008-09, in response to the economic slowdown.

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