US debt will be on the edge of surpassing the Gross Domestic Product in 2012

Were you harboring the opinion that the worst about the US economy is already seen in 2011? If answered yes, you should take this decision only after witnessing the entire 2012. Well, the economic experts are of the opinion that the $14 trillion debt of the US is poised to overtake the Gross Domestic Product (GDP) within the next 2 years as they warn of a ‘super cycle of debt’. Not only will the federal debt be in question in the coming year, the personal debt level will also spur to an unnatural level in 2012. The debt relief companies like the Christian debt consolidation, non-profit debt consolidation firms will gain momentum as a large number of debtors will rush to them for eradicating their increasing personal debt level.

The forecasters in the US predict that the US national debt will exceed the gross domestic product in 2012, as per research and data showed by the International Monetary Fund (IMF).  Since the past 5 decades, the economic superpower expanded at a slow rate of 3.4% but unfortunately it will be even slower in 2012. This entire situation is soon to be seen in the coming year as the President Barack Obama borrowed record amount of funds to help rejuvenate the economy from the longest recession since the 1930s.

In order to attract the investors, the interest rates on the government debt will probably be higher in the long term and this will become a huge burden on the consumers as well as the government. As the forecasts predict the beginning of the era of the debt super cycle, where the total debt within a nation will exceed the total economic output of a nation, the debtors are extremely worried about their financial future.

The largest mutual fund owner in California, Bill Gross said that the economic growth that is expected in 2012 will be slow enough to support the spurring national debt if the real interest rates went up instead of going down. The grim forecast of the US labor market sent the Dow Jones down by 3%. The statistics showed that only 42,000 of the 435,000 jobs created in may, 2011 belonged to the private sector. As the Euro sets to break up within the next 5 years, this warning becomes a gross concern in the US.

The financial state of Greece and all the other Euro zone members like Italy, Portugal, Spain and Ireland have collectively driven the single currency to a 4-year low against the USD and this casts doubt over the future. The Euro currency started the week by dropping to another low as compared to the dollar and fell below $1.20 for the first time since April, 2007. With such negative statistics, what does the US has in store in 2012? Will it backslide into yet another recession or can it restore its lost grip?

While these are the questions that are hovering in the minds of the economists and the consumers, you should stay cautious on your personal grounds so that you don’t need to keep raising your personal debt ceiling and pushing yourself further into the high interest debt hole. Remain aware of the big picture so that you can take the best decisions yourself and give debt a miss.

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