A follow-up note on the growth of debt

Before the silence resumes, an afterthought.

I'm looking at non-financial debt: Domestic Nonfinancial Sectors; Credit Market Instruments; Liability, Level at FRED. Annual data, downloaded to Excel. Looking for something I can compare to what I'm reading about the growth of non-financial debt in CM&Z's The real effects of debt.

They look at debt (first, debt relative to GDP, then the growth of inflation-adjusted debt) and they observe

... the surge in non-financial debt preceding the recent crisis is not a new phenomenon. It is merely the continuation of a trend that was ongoing over the entire period for which we have been able to assemble comprehensive data...
One clear limitation of our dataset is that it starts in 1980. It is sufficient, however, to look back at the history of the United States (for which long back data are easily available) to understand how extraordinary the developments over the last 30 years have been. As Graph 2 shows, the US non-financial debt-to-GDP ratio was steady at around 150% from the early 1950s until the mid-1980s.

They say that non-financial debt has been growing rapidly since the 1980s, but not before the 1980s. They are careless, though, offering no more than a "sufficient" argument. They evaluate the growth of inflation-adjusted debt for the post-1980 but not the pre-1980 years. Without looking at it, they say debt growth was relatively slow before 1980 -- specifically in the US -- and they want me to take their word for it. This I cannot do.

I'm looking at compound annual growth rates for ten-year periods. Looks like CM&Z have it wrong way round. Debt growth shows increase since the 1950s. It was fast since the 1970s, faster than it's been since the mid-1990s! But since 1986, debt growth has been slowing:

Graph #1

Slowing since 1986. That's why GDP growth sucks.

However, because of the growth of debt since the beginning, the level of debt is now very high. This is the reason that the relatively small growth increase of 2001-2008, on my graph, appears as a massive increase in debt in billions and in the debt-to-GDP ratio on everybody else's graphs.

Nonetheless, the trend of debt growth is downward since 1986, and this explains the slowing of economic growth.


Each dot on the graph represents the compound annual growth rate for the 10-year period ending at the date of the dot. The first dot, for example, shows the growth rate for the 1947-1957 period.

The plot peaks at over 12% in 1986 (that is, the 1976-1986 period). It falls to a low of about 5.5% in 2001. It peaks in 2008 at about 7.5%. The graph ends in 2017 with debt growth at about 4% for the last ten years.

The 2008 peak value was exceeded back in 1973.

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Check/duplicate my work:
The value for 1947 is in cell C12, with the following years' data on the rows below. In Column D on row 22 (the row for 1957) is this formula:

=RATE(COUNT(C12:C22)-1,,-C12,C22)

with that formula copied to the rows below. Values from Column D are displayed on the graph.