Ignoring the massive spike in government related debt (Federal, State, AND Local) for the time being and focusing instead on household liabilities as a percent of the national income, we see mortgage debt is now at 70% of GDP (more than double the level seen in the 1980's and 50% more than that seen at the beginning of this decade) and consumer debt is now at 18% of GDP.Who is this debt owed to? I presume most of it is just owed to other Americans. The current account deficit represents the additional debt that is owed abroad. Nevertheless, increasing credit tends to increase GDP and if that credit was spent on productive investment that makes the country more productive, then it will be easy to unwind the increase in debt. If not, well...
The importance of all this is of course that all that debt that has been added over the years has been a huge contributor to that GDP. The fear is that the debt has just pulled a lot of consumption forward rather than infrastructure or other long term investments that will provide future growth opportunities.
The mortgage debt is a far bigger deal than the other debt because it is on a much bigger scale. They should be graphed on the same scale and then it would be clearer.
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