Unsustainable Debt Growth

The table below is broken out by decade. It took $1.36 of debt to create $1 of economic growth during the 1950s. The acceleration began in the 1960s and 1970s with the Vietnam War and the “Space Race,” and continued in the 1980s and 1990s with the leveraged buyout boom and the Internet bubble.

Fast-forward to the most recent decade (through September of last year) and it’s taken nearly $6 of debt to create $1 of economic growth. This is clearly not sustainable, and is a threat to the long-term stability of the US economy.

Date range Decade change in debt
($, billions)
Decade change in GDP
($, billions)
Debt/GDP
12/31/49-12/31/59 337.6 248.0 1.36
12/31/59-12/31/69 752.1 491.3 1.53
12/31/69-12/31/79 2,785.2 1,654.9 1.68
12/31/79-12/31/89 8,562.8 2,922.2 2.93
12/31/89-12/31/99 12,550.0 4,026.0 3.12
12/31/99-9/30/09 27,228.0 4,658.6 5.84

Source: Ned Davis Research, Inc., as of September 30, 2009.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s