The US Federal Government Debt increased $1.57 Trillion during the last year. Yes, Trillion with a "T" from October 13, 2015 to October 13, 2016!
$.39 Trillion of debt came from Social Security (the US budget is toast once Social Security has more outflows than inflows); these bonds can't be traded in the markets.
$1.18 Trillion came from "Public" Debt, that is traded in the markets.
Nominal GDP was about $18.142 Trillion in Q3 2015. (Data Link)
Real GDP for Q3 2016 is expected to be 1.9% annualized, or .475% quarterly growth. (Data Link)
Inflation has been running about 1% according to CPI data (Data Link)
But let's be generous and add 1.5% annualized, or .375% quarterly, for the inflation rate in Q3 2016.
Then nominal GDP in Q3 2016 is forecast to be $18.607 Trillion. We get this figure by taking the Q2 2016 nominal GDP of $18.45 Trillion, and multiplying by 1 + .85% (3.4% annualized nominal growth for Q3 2016).
This is an increase of about $.465 Trillion from Q3 2015 to Q3 2016 (Or even lower if we use a 1% inflation figure).
Now, the problem.
The "formula" for GDP is Y = C + I + G + (X-M)
GDP = Consumption + Investment + Government Spending + (Exports - Imports)
Now, If Government spending increased by $1.57 Trillion and nominal GDP only increases by $.465 Trillion, then the private economy has been in a contraction by over a Trillion dollars! Or, $1.105 Trillion to be precise.
Even if one does not count Social Security debt, $1.18 Trillion minus $.465 Trillion is equal to $.715 Trillion.
It's not looking good for those firms that do not have contracts with the Government.
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I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.