OMB Watch – Economy and Jobs Watch: Consumer Debt Increases, Savings Rate Down
While very recent economic news shows some long-overdue strength – gross domestic product grew at an 8.2% annual rate in the third quarter – mounting levels of both public and private debt remain a concern, both for the near future as well for the long-run health of the economy.
In the second quarter of 2003, household debt increased at an 11.5 percent annual rate, the largest increase in 15 years, according to the Federal Reserve. Total household debt is now nearly $9 trillion and has gown by over 50 percent from 5 years ago. Debt service payments have been steadily growing over the past 10 years (see graph).