The Position, Velocity and Acceleration of Private Debt in the U.S.

In the charts below, we’re going to explore the evolution of private debt in the United States, as reported by the U.S. Federal Reserve in its Flow of Funds data, spanning all the years for which we have quarterly data, showing the results since January 1954.

Here, we’ve calculated private debt as the total liabilities for all sectors of the U.S. economy, less the total liabilities for the Rest of the World, State and Local Governments (less employee retirement funds), and the Federal Government.

The result of that math at the end of each calendar quarter indicates the total level of private debt in the U.S., which is equivalent to “Position” in a simple kinematics problem from high school physics. We then took those results and used linear interpolation to estimate the position of private debt for the months in between the months ending calendar quarters.

We next calculated the year over year compound rate of growth of the amount of private debt for each calendar month, which might also be described as the non-dimensionalized “Velocity” of private debt.

We then went one step further to calculate the “Acceleration” of private debt in the U.S., or rather, the change in the year over year growth rate of private debt from one month to the next.

The results of all this math are graphically presented in the three charts below, which we’ve lined up just like the position-velocity-acceleration versus time charts we had to draw back when we were taking basic physics!

We’ll be doing something more interesting with this data soon, but in the mean time, we should recognize that we could have continued our journey down the kinematics path by also calculating the impulse, or rather the “jerk”, which would be the change in acceleration of private debt. Or if we really wanted to show off, we could have progressively calculated the “jounce” (or “snap”), “crackle” and “pop” of private debt.

The resulting charts past acceleration however weren’t very interesting!

Data Sources

U.S. Federal Reserve. Data Download Program. Z.1 Statistical Release (Total Liabilities for All Sectors, Rest of the World, State and Local Governments Excluding Employee Retirement Funds, Federal Government). 1951Q4 – 2015Q2. [Online Database]. 18 September 2015. Accessed 28 October 2015.