Continuing on my previous post about debt levels and interest rates, I wanted to look at nominal (meaning, not adjusted for inflation) GDP growth. Here's how it looks on a trailing 12-month basis going back to 1986:

These are, of course, the government's numbers, so use at your own risk. But you can clearly see where the recessions are, and I expect that for the immediate future, the line will droop down.

What I find interesting is that long-term Treasury yields have still trended below GDP growth. Will all those foreigners dump their Treasuries? I doubt it, but if they do, it's not because we're unable to pay them back.

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Eddy Elfenbein

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