Public v Private

Part One of a series

Googlin' total US public and private debt got me to a Bailouts blog post, which links to the Federal Reserve Statistical Release website. From there I grabbed the newest (June 10, 2010) and the oldest (September 12, 1996) available "Debt growth, borrowing and debt outstanding" (PDF) files. Each is only 3 pages long. Nice.

To get Debt Outstanding numbers into GoogleDocs in a useful form, I copied the relevant portion of each PDF to a notepad file, saved it, renamed it from "TXT" to "CSV" and then added a bunch of Cs -- commas -- in all the right places, hoping for the best. Not a great deal of work, but more than it should take. The data format is not "friendly." But it's the Federal Reserve, so what can you expect? (This is not the St. Louis Fed. Their stuff is good and friendly.)

But I don't mean to complain too much. Unfriendly formats are better than not having numbers to look at. Thanks, Fed; good job. Two or three tries to get the commas right, followed by a little formatting in the GoogleDocs spreadsheet, and we're good.

And wouldn't you know it, now I have a problem. Couldn't miss it, the dip was that obvious. Notice the red line in this graph rising until 1990, then a kink, and it runs basically flat until 1994. None of the other lines show a comparable slowdown.

A while back I wrote

In 1990 and 1991 the tax code changed. The personal tax deduction for interest expense was eliminated. As a result, people cut back on credit use.

Well... It's true, sort of. As the graph shows, some people cut back on credit use. But it looks like the people who cut back were business people, not "personal tax" payers. The red line here, the one that shows a slowing, shows the debt of nonfinancial businesses, not household debt. Why did debt growth slow in the business sector? I don't know. Why did it not slow in the sector where the tax code actually changed? I don't know... I guess this is why I need to be nice to economists.

Anyway, while we're lookin' at the graph, look at the green line. The green line shows government debt -- federal, state and local, combined. The green line  in this graph rises until 1993, then kinks and runs pretty close to flat until 1999. And then it actually drops. And that's government debt, total government debt that flattened and dropped. People don't talk much about this slowdown, when they talk about government debt.

And while we're looking, take a look at the gold-color line. On this graph it starts out as the lowest of the four, and finishes up as the highest of the four. Obviously, it had the fastest increase during the years shown. This fast-growing, golden line of debt is the debt of financial business.