GDP vs. National Debt–Nice

A lot of talk these days is about the staggering national debt of the U.S. government.

Another very important number is that of our GDP–gross domestic product.

Here’s the bottom line.

You and your spouse, if you have one, earn or generate a certain amount of revenue each year.

That would be your family’s GDP.

If you’re like me and my wife, you have debt that you owe; credit cards, car loans, home mortgages etc…

When the amount of debt exceeds the amount of income in any one year, we get a bit nervous.

Hopefully we have a good relationship with our lenders and they don’t foreclose when they see we’ve had a bad stretch of financial statements.

With diligence and frugality, all of us some day would like to be debt free.

That’s when things really begin to look up, hopefully before we’re rolling around in wheelchairs or sleeping in a retirement home.

My message today is not political–though some may argue against that.

It’s educational, so that when you hear these terms spoken in the news or the pending debates, you’ll have a point of reference.

This next paragraph is taken from today’s Wikipedia page on the subject of U.S. debt vs. GDP.

It’s O.K. to come to a political conclusion after reading it, just don’t blame me for what it says…I’m trying to be extra nice today.

As of July 2012, debt held by the public was $11.12 trillion, while the intra-governmental debt was $4.81 trillion, to give a combined total public debt outstanding of $15.93 trillion, roughly 103% of current dollar GDP. The public debt has increased by over $500 billion each year since fiscal year (FY) 2003, with increases of $1 trillion in FY2008, $1.9 trillion in FY2009, $1.7 trillion in FY2010, and $1.2 trillion in FY2011. As of February 2012, $5.1 trillion or approximately 50% of the debt held by the public was owned by foreign investors, the largest of which were China and Japan at just over $1 trillion each. As of June 2012, nominal GDP of the United States was $15.59 trillion.

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