Owing Debt to the U.S. Government The Federal Reserve Bank of Philadelphia’s Payment Card Center’s Consumer Statistics page provides us with the latest data and trends in consumer credit payments.

So today I’m going to give you the latest overview of consumer debt Owing Debt to the U.S. Government:

It is an invaluable resource for those of us who have made it our mission to monitor the evolving US consumer credit landscape. While it’s true that we have many other great sources of data available, not least those maintained by other Federal Reserve departments (such as the Z.1 and G.19 reports), the Philadelphia Fed Payment Cards Center comes to our rescue. a lot of time by processing raw data for us every quarter Owing Debt to the U.S. Government.

, credit performance, and credit supply and demand in the U.S. from the Payment Card Center. Overall, the picture it paints is pretty familiar to you, and there’s really nothing to it. data that defies any of the post-Lehman trends. Still, there are a few charts I picked earlier that stand out Owing Debt to the U.S. Government.

Again, this is not because they illustrate any new trends, but rather because of the sheer scale of fundamental shifts that have taken place in the post-crisis years and are still on track. So let’s take a look at the latest data on the holdings of consumer debt held by the US government and government-sponsored enterprises (GSEs).

The debt we owe

The total amount of consumer credit outstanding is divided into two segments in Federal Reserve Report G.19: revolving and nonrevolving credit. The first category consists almost entirely of outstanding credit card balances, while the second category is a mixed bag of student loans, auto loans, and loans for mobile homes, boats, and trailers, but does not include home mortgages and other asset-backed real estate loans Owing Debt to the U.S. Government.

As you can see in the chart below, while revolving credit declined relatively slightly in the first two post-crisis years and has remained virtually flat since then, the non-revolving component of the total did not decline nearly as much and then rebounded much more quickly. As a result, the total volume of consumer loans has been growing steadily since 2010.

The debt we owe

The Federal Reserve Flow of Financial Accounts (Report Z.1) gives us data on debt growth and debt outstanding in several sectors. Below you can see a graph of the growth of home mortgages and consumer loans.

The debt we owe

Charges, delinquencies, and bankruptcies continue to decline

The Federal Reserve Board takes its write-off data from the Call Report, which is filed quarterly by all commercial banks. For any category of loans in the report, charge-off rates are calculated as the flow of the bank’s net charge-offs (gross charge-offs minus recoveries) during the quarter divided by the average level of outstanding loans for the period. Below are charts of rates and fee volumes for each of the major categories of consumer loans Owing Debt to the U.S. Government.

Charges, delinquencies, and bankruptcies continue to decline

Charges, delinquencies, and bankruptcies continue to decline

The chart below is constructed from data taken from the call report above and illustrates charge rate movements, calculated by dividing total net on-balance sheet and under-balance credit card charges (gross charge offs minus chargebacks) during the quarter under review by the total amount in balance sheet and under balance sheet at the end of the previous quarter.

Charges, delinquencies, and bankruptcies continue to decline

The Federal Reserve Board also calculates delinquency statistics from data available in the Call Report. The default rate for any category of loans is measured as the ratio of the dollar amount of a bank’s defaulted loans in the category examined to the dollar amount of total defaulted loans in that category. Below are graphs of delinquent rates and delinquent volumes for each of the major categories of consumer loans Owing Debt to the U.S. Government.

Charges, delinquencies, and bankruptcies continue to decline

Charges, delinquencies, and bankruptcies continue to decline

Bankruptcy filings are calculated using data from the Administrative Office of the United States Courts. The graph below shows a sharp drop last year in bankruptcies of non-business entities. The surge in bankruptcies in 2005 was due to the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), which went into effect on October 17, 2005

Charges, delinquencies, and bankruptcies continue to decline

Credit standards remain tight, but demand for loans continues to grow

The data used to track bank lending standards and the demand for consumer credit are taken from questions asked by the Federal Reserve in its Senior Loan Officer Opinion Survey (SLOOS). About 60 large domestic banks and 24 American branches and agencies of foreign banks are surveyed. Respondents answer questions related to changes in the standards and terms of lending by their banks and the state of demand for loans by businesses and households, as well as some other topics Owing Debt to the U.S. Government.

As shown in the chart below, after massive tightening in the hectic months surrounding the 2008 financial crisis, US banks began to rapidly loosen their lending standards, a trend that has continued unabated in the post-crisis period.Credit standards remain tight, but demand for loans continues to growThe continued easing of credit standards has recently been accompanied by an increase in demand for consumer credit, which is now approaching the peak reached in 2003.Credit standards remain tight, but demand for loans continues to grow

The more we earn, the more we owe

The triennial Survey of Consumer Finances (SCF) collects data on balance sheets, pensions, incomes and other demographic characteristics of US families. This data is then used to calculate families’ credit card balances broken down by income level. The first graph below shows the median value of transaction accounts for families with such accounts in 2010 dollars. As you might expect, families in higher income percentiles have higher disposable balances Owing Debt to the U.S. Government.

The more we earn, the more we owe

Now here’s a chart showing the share of families with outstanding credit card balances at each income percentile and the median value of those balances, again in 2010 dollars. As you can see, the highest share of families with outstanding credit card debt is in the middle income brackets, while, as as might be expected, the highest median credit card debt rises largely gradually (and quite significantly ) as household incomes rise.The more we earn, the more we owe

Debt to the government

And now we come to the most interesting part of the Payment Card Center report. The aforementioned Z.1 report provides us with data showing the levels of consumer debt held by several sectors. Z.1 measures outstanding amounts of mortgages for housing and consumption Owing Debt to the U.S. Government.

The federal debt currently exceeds $23.4 trillion. It is estimated that it could grow by another $13 trillion by 2028. The current level of spending is unsustainable and experts agree that the current deficit will have disastrous consequences for the economy.

Basically, the US owes money to two groups:

Public

Intra-governmental holdings

How does federal debt work?
National debt by blog size per year
The government finances the operation of various federal agencies by issuing treasury bills. The Ministry of Finance is in charge of issuing sufficient savings bonds, government bonds and inflation-protected treasury securities to finance the current government budget Owing Debt to the U.S. Government.

The revenue generated by the taxes is used to pay off the bonds that come to maturity. Investors, including banks, foreign governments and individuals, can cash in on these bonds when they mature. The debt ceiling is a ceiling that is set on what the Treasury can issue Owing Debt to the U.S. Government.

Owing Debt to the U.S. Government

Congress keeps raising the debt ceiling to finance government spending. A deficit occurs when spending grows faster than income.

Who does this debt belong to?
The public owes 74 percent of the current federal debt. Domestic debt is 26 percent or $5.9 trillion. The public includes foreign investors and foreign governments. These two groups account for 30 percent of the debt. Individual investors and banks account for 15 percent of the debt.

Table of current national debt policies Blog size
The Federal Reserve holds 12 percent of the Treasury bonds issued. The Federal Reserve buys these bonds to keep interest rates low after the 2008 financial crisis. States and local governments hold 5 percent of the debt Owing Debt to the U.S. Government.

Japan, Brazil, Ireland, the United Kingdom and others. China accounts for 29 percent of all government bonds issued to other countries, equivalent to $1.18 trillion. Japan holds the equivalent of $1.03 trillion in treasuries Owing Debt to the U.S. Government.

Investing in US Treasuries is a deliberate strategy for foreign countries.

China uses these bonds to keep the yuan weaker than the US dollar and benefit from low import prices. Domestic debt includes various funds and holdings Owing Debt to the U.S. Government.

Some agencies take the proceeds and use the money to buy government bonds. This makes the proceeds usable for other agencies and these bonds can be repaid in the future when these funds and holdings need money.

Social Security and Disability Insurance account for half of the national debt. Medicare accounts for 3 percent and pension funds for the military and civil servants account for 36 percent of that debt.

What are the implications of the current deficit level?
Borrowing at this rate causes the cost of debt to rise. Securing additional funds is becoming increasingly difficult and the government is facing higher interest rates. Interest alone on the current federal debt is estimated to reach $7 trillion over the next 10 years Owing Debt to the U.S. Government.

National Debt Interest Cost Chart Blog Size
By 2026, interest would represent the third largest category in terms of government spending. Higher interest rates create a snowball effect that causes debt to grow at an ever faster rate. High interest rates also have an impact on consumers, who end up spending more on mortgages and other loans.

The federal deficit will also impact economic growth and the private sector. A deficit means that fewer funds are available for projects that would boost the economy, such as financing construction projects to improve the country’s infrastructure Owing Debt to the U.S. Government.

The government is also flooding the financial markets with government bonds, which means the private sector will have increasingly difficult problems securing funds from investors.

Want to learn more about the implications of current deficit levels? Check out our graphs on national debt and its effects.

What can you do about this problem? Take action!
There are currently no plans to reduce federal spending or increase revenue. This is a problem that will affect future generations and significantly reduce economic growth for years to come. Net Impact raises awareness of this issue and advocates for responsible fiscal policy through our Up to Us program. You can make a difference by hosting an event on your campus and raising awareness about our fiscal future. With the 2020 election approaching, it is important that we are informed about how our votes can shape our future. Check out the Elections 2020 page to learn more about fiscal issues, voter registration, and how to get involved in this year’s election Owing Debt to the U.S. Government.

ceiling negotiations at the US Capitol building on January 25, 2023. (Anna Moneymaker/Getty Images)
President Joe Biden and the Republican-controlled House of Representatives appear to be on a collision course over raising the statutory national debt limit. House Republicans say they want Biden to accept significant (but unspecified) spending cuts in exchange for raising the cap. But the president insisted that raising the cap — which allows the government to continue paying its obligations under the law on time — should not be a budget negotiation Owing Debt to the U.S. Government.

Public concern about federal spending is on the rise. In a new survey by the Pew Research Center on public policy priorities, 57% of Americans said reducing the budget deficit was the top priority the president and Congress should address this year, up from 45% a year ago. Concern has grown among members of both parties, although Republicans and Republican-leaning independents are still far more likely than lean Democrats and Democrats (71% vs. 44%) to view deficit reduction as a top priority. (When the government spends more than it takes in, it borrows to make up the difference. So the debt can be thought of as the accumulated sum of deficits from previous years that are still outstanding Owing Debt to the U.S. Government.)

Federal borrowing has already essentially reached the current debt limit of $31.38 trillion, although Treasury Secretary Janet Yellen has said she may use various accounting maneuvers to delay a government default by several months. So far, neither the administration nor the House will budge from the positions they have set, so the stalemate continues Owing Debt to the U.S. Government.

With that in mind, here is a basic article on the United States national debt. (See “Why does the US have a debt limit?” below for more information on the legal debt limit.)

Why does the US even have a debt limit Owing Debt to the U.S. Government?

How we did it

The federal government’s total public debt stood at just under $31.46 trillion as of Feb.

10, according to the Treasury Department’s latest daily tally. Almost all of that debt — about $31.38 trillion — is subject to the statutory debt limit, leaving only $25 million in unused borrowing capacity.

A trend chart over time shows that US national debt has long exceeded gross domestic product
For several years now, the national debt has been higher than its gross domestic product, which stood at $26.13 trillion in the fourth quarter of 2022. Owing Debt to the U.S. Government The debt-to-GDP ratio is a useful metric for analyzing debt over the long term because it expresses debt in relative terms compared to the size of the national economy. From this perspective, debt as a share of GDP has gone through three main phases of growth in recent decades. These corresponded to periods when the federal government ran large budget deficits: the Reagan-Bush years in the 1980s and early 1990s; the 2008 financial crisis and subsequent Great Recession; and the pandemic-induced recession of 2020, when the federal debt jumped to an all-time high of 134.8% of GDP. The ratio has fallen a bit since then, but remains well above pre-pandemic levels Owing Debt to the U.S. Government.

Scale showing that other public investors hold 58.9% of public debt securities in September 2022 and Federal Reserve Banks hold 19.7%
While U.S. government debt is perhaps the most widely held class of securities in the world, 21.8% of the public debt, or $6.87 trillion, is held by another component of the federal government itself. This includes Medicare; specialized trust funds, such as those for highways and bank deposit insurance; and civil service and military retirement programs. But the largest part of these “domestic holdings” belongs to Social Security. As of the end of January, the program’s pension and disability trust funds combined held more than $2.8 trillion in special non-tradable Treasuries, or 9% of total debt. (For many years, Social Security collected more in payroll taxes than it paid out in benefits; the excess was required by law to be invested in state treasuries. This made Social Security, for a time, the federal government’s single largest creditor Owing Debt to the U.S. Government.)

Trend chart over time showing Federal Reserve Banks holding nearly one-fifth of US government debt in 2022
Today, the Federal Reserve is the single largest holder of US government debt. While the Fed regularly buys and sells Treasuries to conduct monetary policy, it has been buying Treasuries in massive amounts during the COVID-19 pandemic in an effort to prevent the U.S. economy from collapsing under the pressure of shutdowns and lockdowns Owing Debt to the U.S. Government.

At its peak in April 2022, the Fed held more than $6.25 trillion in U.S. government debt, more than double its holdings just before the pandemic hit the U.S. in March 2020. Even as the Fed began to trim its holdings, it held nearly 6, $1 trillion in government bonds — nearly a fifth of all public debt — as of Sept. 30, 2022, the most recent data available. Ten years earlier, by contrast, the Fed’s share of the debt was just under 11%. (Since the Fed is formally independent of the federal government, its stash is not included among the intra-government holdings discussed above Owing Debt to the U.S. Government.)

A time trend chart showing that interest payments on the US national debt rose at the start of the COVID-19 pandemic
Debt servicing is one of the largest expenditures of the federal government. Net interest payments on the debt are estimated at $395.5 billion this fiscal year, or 6.8% of all federal spending, according to the Office of Management and Budget. That’s more than $100 billion more than the government expects to spend on veterans benefits and services, and more than it will spend on elementary and secondary education, disaster relief, agriculture, science and space programs, foreign aid and natural resources and environmental protection together Owing Debt to the U.S. Government. .

A trend chart over time shows that, despite recent increases, interest rates on US public debt are still at historic lows Owing Debt to the U.S. Government
Debt service as a share of federal spending peaked at more than 15% in the mid-1990s, but generally falling interest rates have helped hold down payments even as the dollar amount continues to rise. In fiscal year 2021, the average interest rate on the federal debt was a record low of 1.605%. But as the Fed raised its key interest rate to try to cool the economy, the US began paying more to borrow: The average interest rate on federal debt rose to 2.07% last year Owing Debt to the U.S. Government.

             Sources