I'm asked every day if America is the next Greece or
Detroit or Puerto Rico -- and the answer is an unequivocal no. The U.S.
economy -- especially the private sector -- is structurally very
healthy. That wasn't the case on the eve of the great financial meltdown
of 2008 when American companies and households were leveraged up to
their eyebrows.What's different today from eight years ago is that now it's the government that's in the fiscal intensive care unit while companies and households have rebooted.
The stunning improvement in business and family balance sheets is arguably the most impressive and underreported characteristic of this U.S. recovery. The latest government statistics indicate that the private sector has massively deleveraged following the debt binge from 2000-2008.
Over the last seven years, American companies have become hyper and even ruthlessly efficient, which has meant shedding unproductive operations and reducing employment, cutting debt burdens and focusing on profitability. It's the reason the stock market has soared since 2008. Companies are now sitting on $1 trillion to $2 trillion in reserve cash, according to the Wall Street Journal, and balance sheets are generally pristine. Households have cut their debts, too.
But the borrowing statistics from the Bureau of Economic Analysis and compiled by economist David Malpass of Encima Global also reveal that there has been one sector of the economy that has been largely immune from this American deleveraging crusade: the government.
