How Did America Go Bankrupt? Slowly, At First, Then All At Once!!!
The US federal debt has again been on the move, as of mid-week up to a fresh record of $20.7 trillion. But, really, without some sort of reference point, what does that mean?
Typically, the metrics of total debt or federal debt divided by GDP (Gross Domestic Product or the total value of goods produced and services provided in the US annually) are used (chart below). Still, that’s a bit ethereal to most folks.
So, I thought I’d make this simpler. The chart below shows federal debt (red line) versus total full time employees (blue line) since 1970. Clearly, debt has surged since 2000 and particularly since 2008 versus decelerating net full time jobs growth. The number of full time employees is economically critical as, generally speaking, only these jobs offer the means to be a home buyer or build savings and wealth in a consumer driven economy. Part time employment generally offers only subsistence level earnings.
So, I thought I’d make this simpler. The chart below shows federal debt (red line) versus total full time employees (blue line) since 1970. Clearly, debt has surged since 2000 and particularly since 2008 versus decelerating net full time jobs growth. The number of full time employees is economically critical as, generally speaking, only these jobs offer the means to be a home buyer or build savings and wealth in a consumer driven economy. Part time employment generally offers only subsistence level earnings.
But if we look at the change over those periods highlighted in the chart above, we get a clear picture (chart below). Full time jobs are being added at a rapidly declining rate while federal debt is surging in the absence of the growth of full time employees.
And if we look at the federal debt added per full time job added (chart below)…broken arrow…broken arrow!!! That is $1.92 million dollars in new federal debt per net new full time employee since 2008. Compare that to the $30 thousand per net new full time employee from ’70 to ’80…or $140 thousand from ’80 to ’90…and nearly quadruples the $460 thousand per from ’00 to ’08. Despite a far larger total population and after ten years of “recovery” since ’08, this is likely as good as it gets. We are likely at or very near the top of this economic cycle. This pattern is likely to carry forward over the next decade and economic cycle…likely with disastrous results.
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