(At least for the Anglo zone; more on Europe and Emerging Markets in coming weeks).
One of the ironies of the economic crisis that began in late 2007 is that the best acronym for it — the “GFC” for “global financial crisis” — was coined in the one country that suffered the least from it, Australia. The year 2014 is the seventh of the “GFC” (the panic began on August 9, 2007, when BNP Paribas shut down three of its subprime-based funds), but at last the majority of economic reports are of sustained if anaemic growth, rather than of bank failures and recession. Australia’s reported growth rate for 2013 of 2.8 per cent follows the UK reporting 1.9 per cent and the US 2.4 per cent; even the EU, where several countries are still mired in outright Depressions, recorded an overall growth rate of 0.1 per cent for 2013.
These are hardly sterling growth rates, but the fact that they are all positive is causing a noticeable change of mood in economic commentary — and a shift in public expectations as well. Is it enough to call the GFC/Great Recession/North Atlantic Financial Crisis over?
It isn’t. But I’m willing to do so on an entirely different measure: the rate of change of private debt is now strongly positive. The period of private sector deleveraging that caused the crisis appears to be over. Debt is now not merely growing, but growing faster than GDP — see figure 1.
Figure 1: Deleveraging is over — for the time being
