The sharp rise in federal borrowing is offsetting efforts of consumers to reduce debt, leaving the economy deeper in debt than when the recession began in December 2007, a USA TODAY analysis finds.
The substitution of government debt for consumer debt helped end the recession and start a recovery, economists say, but it leaves the nation’s long-term economic health in peril.
Households have reduced debt by $549billion since 2007, mostly by cutting mortgages through defaults and paying down credit cards. During that time, the federal government has added more than $4trillion in debt, pushing the country’s total borrowing to a record $36.5trillion, excluding the financial industry, according to the Federal Reserve.