Floyd Norris of the New York Times wrote a very interesting article in that newspaper this past Saturday. He pointed out that since the 1950s when the Government started keeping track of debt levels in this country, debt growth has never been as slow as it was in the second quarter of this year.
He went on to explain that the private sector debt actually fell, also a first in over half a century, while Federal Government debt soared, a fact we all know to be true.
The facts and figures he displayed say a lot about what the U.S. economic recovery is likely to look like. The Government is the only major source of growth at this time in our economy. The entire stimulus is emanating from Federal Government borrowings and that stimulus is filtering down into the private sector through one-time Government sponsored incentives to individuals to purchase homes and automobiles.
The other broad economic sectors of our economy – consumer, non-financial and financial business – are engaged in balance sheet restructuring, which is equivalent to being in a retrenchment mode.