In real dollars, the US national debt became about the size of all personal incomes earned by the US population in 2009. In other words, the average US citizen carries, on behalf of the government, a debt of US$35.3 thousand (red line) comparable to the US$35.8 thousand of the average annual earnings (blue line).

Since 1929, national debt and personal income show a strong correlation (mostly well above 0.5), exception made of the great depression of the 1930s (1929-1933), marked by a negative correlation (-0.7 to -0.9) of rising debt and falling income. National debt may be considered a historical marker:

1. 1929 crisis: widespread unemployment and business demise caused personal incomes to go down, and national debt to grow in support of social assistance and public investment.
2. World War II 1944-1950: incomes bounced back, but debt increased to high peaks, attaining 150% of income (both in per capita terms -- blue dotted line, scale on the right-hand Y-axis), due to the war effort.
3. 1951-1980: in spite of both Korean (1950-1953) and Vietnam wars (1954-1975), an economic bonanza and budget control kept debt on check, the latter plunging to the lows 40% of income.
4. 1981-1995, inauguration of the "Reaganomics" era: during the mandates of Reagan (1981-1989) and George H. Bush (1989-1993) debt started to run much faster than income, rising to 80% of the latter.
5. 1995-2001: adopting a "balanced budget" approach, Clinton (1993-2001) succeeded in containing debt (falling from 80% to 65% of income), while at the same time planting the seeds that would feed the forthcoming 2008 financial crisis.
6. After 2001: George W. Bush (2001-2009) removed the lids, let debt climb without checks, and gladly indulged in expensive war operations in Iraq and Afghanistan.
7. 2008 crisis: looks like an "encore" of the 1929 crash. Between 2007 and 2009, debt grew by 28%, income went down by 2% -- another negative correlation.

Is this cause for concern?

• The good news is that US is the prime economy worldwide. Should it warm up, it could generate enough surplus to reabsorb the debt... provided all other factors (namely social security, medicare and medicaid requirements) remain the same. Another good news is that out of the total national debt, only 63.4%, the $6.88 trillion (constant US$) held by the public (i.e. that have actually been sold in credit markets, the remaining $3.97 trillion - constant US$ - being held by various federal agencies) influence interest rates and private investment decisions. More good news is that the rest of the world is giving a friendly hand. The US dollar, of which large quantities are held abroad, lost 24% of its value in the last ten years, meaning that the portion of debt held by foreign entities is being silently reduced at the same rate. This is quite an enviable position compared with the one of other highly indebted nations like Japan, Italy or Greece.
• The bad news is that the economic crisis may be more serious than what one would wish, causing the chasm between debt and income to grow to very painful levels. The unemployment rate went up to 9.77% in January 2010 from 7.7% in January 2008, personal expenditure decreased by 1.7% from 2008 to 2009, and the outstanding debt of private consumers reached $2.3 trillion (constant US$), mortgage not included, by the end of fiscal year 2009. The overall scenario is darkened by the additional $2.1 trillion (constant US$) of state and local administrations debt. Financing will become more expensive for the government, therefore less resources will be available to fund social programmes. Taxes will get higher and less money will be left in the pocket of the average citizen (see US debt & the financial crisis).

Sources: US Treasury, US Bureau of Economic Analysis, and US Census Bureau.

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