No, Debt Is Not at Scary Levels Right Now

The Wall Street Journal regurgitates concerns about growing debt today, promising 14 charts that tell the story. It’s a weird collection of charts, though, one that seems almost determined not to show debt levels in their simplest form. So here they are. First, corporate debt:

This does not look especially scary. Now here’s household debt:

Again, not very scary. In the case of both corporate and household debt, it doesn’t do to just show raw levels or BBB bond issuance or median income. The simplest view is to look at total debt as a percentage of something that accounts for the fact that everything is growing, not just debt. In the case of corporations, debt-to-equity levels are the usual way of gauging things. In the case of households, debt as a percentage of income is the most revealing. Both are at historically low levels.

In the case of corporate debt, you could also look at debt as a percentage of GDP, and that does indeed show steady growth over the past few years—although it’s basically just following the trendline of the past few decades. Still, that might be a modest warning sign.

Overall, though, it’s hard to see debt as a huge problem at the moment. The one exception might be state-level government debt, although that’s declined over the past few years from a post-recession high of 27 percent of GDP back down to a more manageable 17 percent of GDP. That headroom will come in handy, since tax revenues have cratered during the COVID-19 pandemic and Republicans in Congress seemingly have no desire to help out.

Bottom line: There are lots of things to worry about these days, but overall debt levels probably don’t make the top ten. What does make the top ten, as usual, is assistance aimed specifically at people whose incomes have been hit the hardest by COVID-19. We should worry a lot more about that and a lot less about economy-wide debt levels.

IT'S NOT THAT WE'RE SCREWED WITHOUT TRUMP:

"It's that we're screwed with or without him if we can't show the public that what we do matters for the long term," writes Mother Jones CEO Monika Bauerlein as she kicks off our drive to raise $350,000 in donations from readers by July 17.

This is a big one for us. It's our first time asking for an outpouring of support since screams of FAKE NEWS and so much of what Trump stood for made everything we do so visceral. Like most newsrooms, we face incredibly hard budget realities, and it's unnerving needing to raise big money when traffic is down.

So, as we ask you to consider supporting our team's journalism, we thought we'd slow down and check in about where Mother Jones is and where we're going after the chaotic last several years. This comparatively slow moment is also an urgent one for Mother Jones: You can read more in "Slow News Is Good News," and if you're able to, please support our team's hard-hitting journalism and help us reach our big $350,000 goal with a donation today.

payment methods

IT'S NOT THAT WE'RE SCREWED WITHOUT TRUMP:

"It's that we're screwed with or without him if we can't show the public that what we do matters for the long term," writes Mother Jones CEO Monika Bauerlein as she kicks off our drive to raise $350,000 in donations from readers by July 17.

This is a big one for us. So, as we ask you to consider supporting our team's journalism, we thought we'd slow down and check in about where Mother Jones is and where we're going after the chaotic last several years. This comparatively slow moment is also an urgent one for Mother Jones: You can read more in "Slow News Is Good News," and if you're able to, please support our team's hard-hitting journalism and help us reach our big $350,000 goal with a donation today.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate