According to a recent report from the Federal Reserve, it appears as though American consumers and businesses are doing a better job of managing debt problems than states and the federal government.
Overall, household debt decreased by an annual rate of 1.75 percent in the second quarter and sat at $13.7 trillion. Mortgage debt dropped by 1.5 percent, while consumer credit – which would include credit card debt – fell by 6.5 percent. This was the fourth consecutive quarter that household debt dropped.
Nonfinancial business debt saw its largest drop since 1993, the Fed reported. Business debt fell by 1.75 percent during the second quarter and came in at $11.2 trillion.
“The decline was concentrated in commercial paper, loans, and commercial mortgage borrowing,” the Fed noted.
Local and state governments, along with the federal government, saw their debts increase substantially. Debt for state and local governments increased by an annual rate of 8.25 percent, while the federal government saw it rise by 28.25 percent. In total, domestic debt amounted to $34.4 trillion.
A recent AP-GfK poll showed that many Americans are concerned that increased government debt will affect future generations negatively. Of respondents, 79 percent said they felt either very or somewhat worried that increased federal debt will have a negative impact on the financial future of coming generations.