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 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.

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.

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.

 

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 Owing Debt to the U.S. Government.

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

The continued easing of credit standards has recently been accompanied by an increase in demand for consumer credit, which is now approaching the peak reached inOwing Debt to the U.S. Government.

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 Owing Debt to the U.S. Government.

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 Z.1 report mentioned above gives us data on the amount of consumer debt held for a few seconds

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.

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 Owing Debt to the U.S. Government.

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.

Foreign governments that have bought US Treasuries include China, 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.

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.

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 Owing Debt to the U.S. Government.

What are the implications of the current deficit level Owing Debt to the U.S. Government?
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 Owing Debt to the U.S. Government.

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.

The term “national debt” refers to a country’s outstanding financial obligations. Such obligations may also be called government debt, federal debt, or public debt. The United States national debt is what the federal government owes creditors—including debt held by the public and federal government trust funds. The US national debt totaled $31.1 trillion by October 2022, a record high.
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KEY SHOTS
A country’s national debt is the total amount owed to creditors Owing Debt to the U.S. Government.
Economists tend to focus on a country’s debt-to-GDP ratio as an indicator of its sustainability.
Countries that borrow in a currency they control may choose to issue another currency to repay the debt.
Rising interest costs and Social Security deficits are likely to exacerbate rapidly growing US budget deficits in the coming years Owing Debt to the U.S. Government.
The U.S. national debt is now in the tens of trillions of dollars, hitting record highs on a monthly basis.
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What does national debt mean to you?
Understanding the National Debt
The nominal dollar level of government debt is generally considered less important than its share of a country’s gross domestic product (GDP)—the debt-to-GDP ratio. This is because a country’s tax base grows along with its economy, increasing the revenue the government can raise to service the debt.

In addition, economic growth tends to increase the demand for government bonds. Public borrowing covers the net savings of households and corporations and satisfies their demand for safe assets—debt securities that are expected to retain their value over time Owing Debt to the U.S. Government.

$31.1 trillion
US national debt as of October 2022.
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National debt vs. budget deficit Owing Debt to the U.S. Government
It is important to understand the difference between the federal government’s annual budget deficit (also known as the fiscal deficit) and the national debt. The federal government generates an annual deficit when its expenditures during the year exceed government revenues from sources including personal, corporate, and payroll taxes Owing Debt to the U.S. Government.

When annual appropriations by Congress exceed federal revenues, the U.S. Treasury finances the deficit by issuing Treasury bills, notes, and bonds. These Treasury products can be purchased by investors including individuals and pension funds; banks, insurance companies and other financial institutions; and the Federal Reserve as well as foreign central banks Owing Debt to the U.S. Government.

A country’s national debt is the sum of such annual budget deficits and any compensating surpluses. It is the total amount of money a country owes to creditors Owing Debt to the U.S. Government.

Forms of government loans
In addition to selling T-bills, bonds, and notes, the U.S. government borrows by issuing Treasury Inflation-Protected Securities (TIPS) and Floating Rate Bonds (FRNs). Its borrowing instruments also include savings bonds as well as securities on government accounts, which represent intergovernmental debt.
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Other countries borrowed from international organizations such as the International Monetary Fund (IMF) and the World Bank, as well as from private financial institutions Owing Debt to the U.S. Government.

Public debt management
In the United States, the national debt is legally limited by a congressionally mandated debt ceiling, which requires Congress to approve borrowing above the limit regardless of its prior approval of the items responsible for breaching the debt ceiling Owing Debt to the U.S. Government.
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The U.S. Treasury publishes daily the value of outstanding public debt subject to the debt ceiling based on reports received at the end of the previous day from approximately 50 sources, including branches of the Federal Reserve Bank, listing government securities sold and redeemed that day Owing Debt to the U.S. Government.
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Conventional strategies for reducing national debt focus on some combination of reduced spending and policies to promote faster economic growth, which in turn can increase government revenues.

The more radical (and usually costly) solutions most often adopted by governments facing unsustainable debt include formal debt restructuring, debt monetization, or outright default Owing Debt to the U.S. Government.

Central banks buying their own government’s debt monetize it by paying for the liabilities with the currency they issue. Governments and central banks can also monetize long-term fixed debt by increasing the rate of inflation. Some argue that low interest rates can serve the same purpose, describing them as financial repression. However, interest rates are a byproduct of economic conditions rather than government policies aimed at reducing debt service costs Owing Debt to the U.S. Government.

A Brief History of the US Debt
A History of the American Debt
Sabrina Jiang / Investopedia

Almost all national governments borrow money. The US has carried national debt throughout its history, beginning with loans that financed the Revolutionary War Owing Debt to the U.S. Government.
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Since then, debt has grown with the economy as a result of increased government responsibility and in response to economic developments Owing Debt to the U.S. Government.

Federal debt is primarily held by the American public, followed by foreign governments and American banks and investors. Note that the portion of the federal debt held by the public is considered more meaningful than the total national debt because it does not include intra-governmental debt—that is, it only accounts for US debt held by entities other than the federal government. So while the national debt was $31.1 trillion in October 2022, the federal debt held by the public was $24.3 trillion and the domestic debt was $6.9 trillion.
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So while the national debt to GDP ratio was 121% in the second quarter (Q2) of 2022, the federal debt to GDP ratio, which includes only debt held by the public, was 95%.
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The ratio of US federal debt held by the public to GDP has fluctuated widely, from less than 15% just before the Great Depression to more than 100% in the aftermath of World War II and back to around 25% during the 1970s. The ratio then rose to almost 48% by 1993 and then fell to 31.5% Owing Debt to the U.S. Government.
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Since then, it has grown at an accelerating rate, driven higher by the Great Recession, the Tax Cuts and Jobs Act (TCJA), and the COVID-19 pandemic Owing Debt to the U.S. Government.

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National Debt Policy
Disagreements about the national debt have repeatedly occupied the US Congress. Whenever the national debt approaches the limit that Congress regularly sets, lawmakers face the choice of raising the ceiling again or letting the U.S. government default, risking dire economic consequences. The U.S. government briefly stalled before Congress raised the limit in 2013 Owing Debt to the U.S. Government.

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