NCPA - National Center for Policy Analysis

The Rising Nonfederal Debt

March 2, 2000

The total debt of state and local governments, corporations and households is has been piling up at a record pace in recent years as a percentage of gross domestic product (GDP).

  • As of 1999, nonfederal debt stood at 144.48 percent of GDP -- compared to 92.12 percent for 1959 -- rising more or less steadily throughout the intervening years.
  • Corporations are said to be borrowing relatively less these days, just as households are borrowing more.
  • Federal debt, on course, has been declining -- from 50.23 percent of GDP around 1993 to 39.63 percent last year.
  • When federal and nonfederal debt are bundled together, the decline in the federal share offsets the increase in nonfederal debt to reveal a sort of plateau -- from a peak of 188.85 percent in the early 1990s to 184.11 percent of GDP last year.

The Federal Reserve estimates that in 1998, the average family's debt service burden -- including interest and principal -- was 14.5 percent of disposable after-tax income. That's up from 12.7 percent in 1989.

As a fraction of disposable personal income, total household debt in the third quarter of 1999 stood at 95 percent.

Source: Peter Brimelow and Edwin S. Rubenstein (Hudson Institute), "Charticle: Expand Now, Pay Later?" Forbes, March 6, 2000.

 

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