It is no secret that the nations of the world have accumulated mountains of debt over time. It is also not just the nations and central banks that have accumulated trillions of dollars worth of debt. The Institute of International Finance (IIF) has issued its latest outlook on debt, with the third quarter of 2019 being the most recent it has been able to tally. What will matter the most to Americans is how much of the global debt actually is America’s, compared with the rest of the world.
Global debt is now close to $253 trillion and it is expected to grow in 2020. It is called to rise to more than $257 trillion by the end of the first quarter in 2020. The main growth engine for all this debt is primarily the non-financial sector.
To put the most recent figure of roughly $253 trillion in debt into context, that represents a global debt-to-GDP ratio of over 322%. Debt has risen across households, corporations and governments alike, but that debt is climbing the most among corporations and governments.
The IIF data also indicated that non-financial corporate debt in emerging markets has risen by more than 8% to about $31 trillion. Total government debt among developed markets rose by just over 4% to more than $52 trillion.
While debt is already at levels hard to fathom exactly, low interest rates and stronger credit profiles are expected to keep the mountain of global debt growing ever larger.
24/7 Wall St. wanted to put some of this overgrowing debt into context in U.S. terms. We have used sources outside of the IIF to try to show a partial read on how these figures stack up.
A look at the so-called government debt clock on January 13 shows a total U.S. government debt of almost $23.18 trillion, while the TreasuryDirect site showed a total public debt outstanding balance of almost $23.17 trillion as of January 9, 2020. The Treasury data shows a breakdown of $17.156 trillion in debt held by the public and another $6.01 trillion in intragovernmental holdings.
The total “Debt Held by the Public,” according to the Treasury, is the combined total of federal debt held by individuals, corporations, state/local governments, Federal Reserve banks, foreign governments and other entities outside the U.S. government, less Federal Financing Bank securities. The so-called intragovernmental holdings are made of Government Account Series securities held by government trust funds, revolving funds, and special funds, as well as Federal Financing Bank securities.
According to the Department of Commerce, U.S. gross domestic product for the third quarter was still rising. The so-called current‑dollar GDP was up by 3.8% ($202.3 billion) to a level of $21.54 trillion, but that compared with a 4.7% gain ($241.4 billion) in the second quarter of 2019. The St. Louis Federal Reserve’s tracking of real GDP showed an all-time high of $19.12 trillion as of the third quarter of 2019.
The New York Federal Reserve Bank’s coverage for “Household Debt and Credit” report for the third quarter of 2019 showed that total U.S. household debt increased by $92 billion (or 0.7 %) to $13.95 trillion. According to the formal report, it was the 21st consecutive quarterly increase and was nominally higher by $1.3 trillion than the previous peak of $12.68 trillion all the way back in the third quarter of 2008. Of the debt, mortgage balances were at a total of $9.44 trillion.
The St. Louis Fed also showed that a total of $6.6 trillion non-financial corporate business debt was outstanding. According to a report issued by Standard & Poor’s back in May of 2019, the total outstanding debt instruments from all U.S. companies accounted for roughly 48% of total global corporate debt.
There are variations of debt tallies that have discrepancies from source to source due to measurements and adjustments. These reports are also subject to revisions over time.