Debt, debt, an economy fueled, funded and fed by debt. That's what many economists and economics bloggers are reporting via real bona fide facts.
Via the Manufacturing and Technology Newsletter, Dr. Charles W. McMillion reports:
In just the past seven years, U.S. household debt almost doubled and federal debt soared by near two-thirds, rocketing by a combined $10.5 trillion. The total combined debt of households ($14.4 trillion) and the federal government ($9.2 trillion) is now 168 percent of GDP, far higher even than in the brief spike during World War II
McMillion also weighs in on the lack of real policy change to address the underlying causes:
the only policies seriously considered by this year's crop of Wall
Street-funded political candidates is more short-term household and federal debt "stimulus." Locked into a failed, 30-year-old ideology of deregulation and debt, there is still no option to compete with the remarkably effective industrial and trade policies pursued by China and others.
Bonddad has some graphs illustrating the dramatic increase in overall debt to GDP. Basically we hyped the price of houses so people could borrow against them, which was a self-feeding vicious cycle of housing inflation and more debt.
Businessweek has an article, How Real was the Prosperity? where the subtitle is:
We're just beginning to figure out how much of the nation's recent growth was the result of a credit-induced frenzy
As of the third quarter of 2007, the 10-year growth rate for consumption was 3.6%, vs. GDP growth for the same period of 2.9%
In other words, we borrowed to give the illusion we were producing.
Here's a scary statistic from Business Week:
the [corporate] profit surge has been mainly in one area, financial services. Financial institutions have benefited from the consumer credit boom, the proliferation of new financial instruments, and relatively low rates
So, the profit was primarily from bad debt for the last 7 years. Can someone say Ponzi scheme?
McMillion on the misleading productivity growth:
BLS [jobs and employment] data (show output growth since 2001 is among the weakest since the Depression and the gain in total hours worked (just 0.5 percent) is, by far, the weakest. This is why productivity growth has appeared misleadingly healthy; productivity is a measure of output per hour of labor
And lest we not forget loophole statistics to inflate GDP via Phantom growthby assigning outsourced jobs as domestic production.
Maybe I should have added a forth "F" word to the the title?