The headline above is not a mistake; aggregate debt to GDP is now growing again in the US . This is evident if we look at the broadest measure of credit in the US which rose to a new high of $57 trillion USD in the first quarter of 2013.
As a share of nominal GDP this is still well below the highs reached in mid – 2009 at 373%, but the main message is that this number is now growing again. From 3Q12 to 1Q13 the total stock of debt in the US rose from 341% to 345% of nominal GDP .
Looking at sub-sectors reveals the driving forces of rising debt in the US. Household debt continues to decline while federal and corporate debt has ascended new highs.
The interesting point here is that corporate US continues to lever up and has increased its debt burden (as a share of GDP) by almost the same amount as Federal debt in the past year. Given that the stock of total corporate debt is significantly lower than Federal debt, this is impressive. This is significant. We recently argued in a thematic report that conditions were brewing for a corporate bond bubble . The ongoing releveraging of corporate America supports this view.