The real rate of growth in GDP from 2007 -2012 is = .8% compared to the 2.21% 10 year rate. This has remained typically strong for the U.S. thanks to a rising surplus in investment income and growth in the traditional surplus in services trade, such as royalties.
As can be seen and been talked about previously the American debt levels were typically at a lower than average rate the majority of which had been long-term accumulated. The GFC however required immediate monetary intervention and hand-outs in the forms of purchasing mortgage backed securities and buying federal treasuries. This was apart of the U.S’s quantitative easing program which consisted of an unprecedented four rounds. The first round started in November 2008 and continued for17 months at 100bn worth of mortgage backed securities a month. Quantitative easing’s 2 and 3 scaled back to 85bn a month however the third’s only time restriction was until favourable market conditions, particularly being labour market improvements were recovered. Through quantitative easing 3 Outcomes consisted of;
• Unemployment dropped from 7.5% - 6.6%
The Federal bank then announced a policy that targeted the unemployment rate directly, stating that QE4 would continue until either unemployment fell below 6.5%, or until core inflation rose above 2.5%.
This Debt is not necessarily a problem if you have the income to cover it and will eventually Need to be brought back under control