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Total US debt soars to nearly $60 trn, foreshadows new recession

Published time: June 16, 2014 23:15
Edited time: June 18, 2014 18:20
Reuters/Lee Jae-Won

Reuters/Lee Jae-Won

America - its government, businesses, and people - are nearly $60 trillion in debt, according to the latest economic data from thethe St. Louis Federal Reserve. And private debt - not government borrowing - is the biggest reason for the huge deficit.

Total US debt at the end of the first quarter of 2014, on March 31 totaled almost $59.4 trillion - up nearly $500 billion from the end of the fourth quarter of 2013, according to the data. Total debt (the combination of government, business, mortgage, and consumer debt) was $2.2 trillion 40 years ago.

“In 50 short years, debt has gone from being a luxury for a few to a convenience for many to an addiction for most to a disease for all,” James Butler wrote in an Independent Voters Network (IVN) op-ed. “It is a virus that has spread to every aspect of our economy, from a consumer using a credit card to buy a $0.75 candy bar in a vending machine to a government borrowing $17 trillion to keep the lights on.”

According to a 2012 study published in the Economist, rapid growth in private debt is a better predictor of recessions than increases in public debt, growth in money supply, or trade imbalances. Consumer credit in the US rose by 22 percent over the last three years, reaching a record-high $3.18 trillion in April, the Fed reported on Friday.

Credit card use (or revolving credit) rose by $8.8 billion, while non-revolving credit like auto loans and student loans made by the government surged up by $18 billion in April. Non-revolving credit jumped by 8.2 percent over the last year, while revolving credit only rose 2.2 percent over the same time period.

“For a while after the recession it was trendy to cut up your credit cards and get out of debt,” Michael Snyder wrote in an InfoWars op-ed. “But that fad wore off rather quickly, didn’t it?”

Snyder noted that 56 percent of all Americans have a subprime credit rating, and that the average monthly car payment in the US is $474. He added that 52 percent of homeowners are overextended on their mortgages and “cannot even afford the house that they are living in right now.”

Debt is hurting young adults the most. Millennials say they are spending at least half their monthly paychecks on paying off debt, a recent Wells Fargo survey found. And two years out of college, half of all graduates are still relying on their parents or other family members for some sort of financial help, according to a University of Arizona study, which also found that only 49 percent of graduates are working full-time.

"Whether or not a weak labor market is increasing the need for intergenerational support -- a likely driver in today's economy -- our data clearly showed that many young adults today may not be earning enough to make it on their own, even when working full time," the report stated.

Most of the debt that young adults face is student loan debt, which totals more than $1.2 trillion, according to the Federal Reserve. Of that debt, approximately $124 billion is more than 90 days delinquent.

“What we have done to our young people is shameful. We have encouraged them to sign up for a lifetime of debt slavery before they even understand what life is all about,” Snyder wrote.

The Congressional Budget Office predicts that the economy will stall by 2017 because Americans will continue spending, but wages and wealth won’t be going up - leading to increased income inequality in the country, the Guardian reported.

“That ever-increasing gap between income and consumption has been filled by borrowing,” the Guardian said. “These were the debt dynamics in the lead-up to the recession. But they are also the dynamics leading out of the crisis, and continuing today with no end in sight.”

Economists have not agreed on how to stave off the impending crisis. But Americans’ addiction to spending on credit will not help.

“The problem is, the more debt we have, the more future income must be used to pay the debt and its interest, which reduces the money we have to spend on things. This works to slow the economy,” Butler wrote.

“Eventually, the negative effect of the debt load becomes stronger than the positive effect of the added spending and a recession is triggered — or worse.”

Comments (75)


Emmett 19.06.2014 10:15

Billy 19.06.2014 02:10

They just keep kicking the can down the road to the next administration in office, and whichever person that happens to be President when it all crashes gets to take the blame.


That will be Obama as US economy is crashing and there's no hiding it even as western media report US economy is healthy, thriving and stock market is at an all time high, etc.
Yet in face of all this supposed good economic news businesses are closing; less people have jobs; cities going bankrupt; schools closing due to lack of money; ... the reality doesn't support what media reports.


WL 19.06.2014 02:53

My father has been in business for 40 years. Even he admits the US is bankrupt.

But this is not good news, not even for people to think so b/c they have been mistreated and hurt by terrible US foreign policy errors.

Thi s is not good news at all. If you like eating, you do not want the US to go down in flames over night, as much as you may have been hurt by their military.

T he problem is that American ego simply will not let us partner with them AS EQUALS.

I do not want to be subjugated. But partner with me, and I will work to the bone with you. That's a promise!


WL 19.06.2014 02:49

We have reached a point of total stalemate. The economic system built around the babyroom - Crisis in the Welfare State (Paris conference, 1980) - took the Canada-US relationship from trade partners & military allies, to neo-colonial relationship to the detriment of post baby boomers.

Th ere was absolutely ZERO actual need for NATO to do what it did in the Ukraine.

Mo st people can't and won't understand that means.

Exam ple: If we travel to the Lugansk oblast to see relatives, CIA will tell Kiev junta to harass us, and Russian militias will do just the same.

To see her grandma, my daughter now risks her life.

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