Get used to hearing “trillion” –  i.e., a million millions.  Two decades ago, I heard a politician lament about government spending, “a million here, a million there, pretty soon you’re talking real money.”   Today, Wall Street and Washington DC are awash in discussions of financial and economic factors that need measuring with a trillion dollar yardstick.  Those discussions may sound esoteric but the magnitude of their influence on our lives makes them newsworthy.   What follows is some context for the main trillion dollar issues that are important to consumers and that will dominate news.  Other topics can be important, but rarely as deeply or to as many of our neighbors.  These topics are big enough to empower or constrain our freedoms.

The Gross Domestic Product (GDP) totals the value of goods and services that we produced in the year.   “Growth in GDP,” is the common target for those concerned with increasing Americans’ welfare. GDP in 2016 was 18.6 trillion.  The Administration’s goal is a 3% or more level of growth, significantly higher than the 1.9% growth in 2016.  Achieving a 3% goal might provide the administration a chance to accomplish its tax overhaul, health care revamp and military funding promises.  For consumers, a 3% rate of growth could provide capacity for some wage increases.  Wages have been nearly flat due to sagging labor productivity.  If we are stuck at a 1.5% growth as many predict, it could lead to miserable years ahead.

The national debt measures the excess of federal government spending over government revenues (mostly tax).  Today the national debt stands at $20 trillion.  State debt and local debt stand at $1.2 trillion and $1.9 trillion respectively.  The money loaned to governments comes from consumer savings or from the Federal Reserve Board which buys Treasury bills and notes.  About $6 trillion in US debt is held by trading partners such as China.

The Federal Reserve Board helped the US recover from the great recession by buying Treasuries, thereby pushing interest rates lower.  In that process, the Federal Reserve accumulated $4 trillion of Treasuries and mortgage backed securities in its balance sheet.  When Treasury’s debts come due (e.g. 1.2 trillion in the next 5 years), government will need to pay them off or “roll them over” – picking a new due date and if government waits too long, it may be stuck paying much higher interest payments, and that will impair the US government’s ability to afford discretionary projects.

Businesses owe $2 trillion in debt that is coming due over the next five years.  Like the Treasury, they will often roll over those debts, but later, they may face much higher interest costs.  Of that $2 trillion, $1 trillion is considered “junk” debt.  Junk will be even more costly to roll over.

In January 2016, 146 million were employed by American businesses or government.  In 2015, they earned about $15 trillion in personal income.  By the end of 2016, US household debt reached $12.68 trillion, and $8.48 trillion of that was mortgage debt.  Other big chunks of consumer debt are student loans ($1.31 trillion), auto loans ($1.16 trillion), and credit card debt ($ 0.78 trillion).  Within the two-thirds of families that have a 401(k) or defined contribution pension plan, their average combined balance value is $194,000.  US families have about $5 trillion in deposit accounts.

We all look forward to a time when we can fixate less on pocketbook issues and more on quality of life.  Until then, when these trillion dollar issue are the subject of political discussion, it is in our interest to pay attention and form an opinion on what we think would be the right course of action.