So while the federal deficit has vanished, private sector debt has ballooned to 7%?
>Let us now look at the US from this perspective. The picture is not a
>pretty one. The US federal, state and local governments are
>generating a combined fiscal surplus of 1.5% of GDP or more. The US
>current account deficit is approaching 3.5% of GDP and likely rising.
>It is a national accounts identity that the savings deficits of the
>two combined private sectors - households and corporations---must
>equal the sum of these savings surpluses of the government and the
>rest of the world. It does not matter if the US household savings
>data understates household savings, as many Wall Street economists
>argue; that simply implies that the corporate savings data - retained
>profits -are overstated by a corresponding amount which, given the
>lofty valuation levels of current US stock prices, is probably for
>the worst (although these same Wall Street economists never
>acknowledge this latter point). Given the short falls in both US
>household and corporate savings, the large private sector deficit of
>the US must now be largely financed from borrowings from the rest of
>the world.