Increasing debt, slowing growth

Real Gross Domestic Product, GDPC1, Federal Debt to GDP ratio, GFDEGDQ188S, 1966 to 2013, measured quarterly

A combination of the latest US GDP numbers failing to inspire and The Fed’s waffling on further stimulus (seriously, if the economy were on track they should be talking about decreasing further debt purchases) has led people to begin to question the current policy of relentlessly increasing debt.

Just to clarify things I thought I’d take a look back at overall US borrowings and growth. The chart above shows two series: first, Real Gross Domestic Product (GDPC1, black line) compared with the Debt/GDP ratio coincident with GDP (GFDEGDQ188S, red line), measured quarterly for the period 1966 to 2013. Periods of recession are indicated with vertical grey bars. For each period of growth I’ve presented two numbers – real GDP and the overall percentage of Federal Debt to US GDP.

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