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Report: Debt heading to 200 percent of GDP

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    WSJ's Steve Moore weighs in

  • Duration 3:39
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We are watching the Dow right now the blue chips flirting with the 141000.

Mark for the first time in more than five years take a look there -- thirteen 945 right now down a few points from yesterday's close but the good news for Wall Street.

Comes amid disappointing economic news.

The US economy showing signs of slowing down the government says the economy sharply contracted in the fourth quarter of 2012.

Growing -- only 110.

Of a percent and and alarming new report saying America's debt he's headed toward 200% of the total economy.

That would be like Greece on steroids even after the fiscal cliff deal.

Steve Moore is senior economics writer for the Wall Street Journal what is it about this the last quarter Steve what caused the shrinkage.

By no job no Wall Street is doing great well main street isn't doing so well and you know this this new report suggests that this economy still has not.

Really fully recovered from the financial crisis for years ago in -- the thing that's really disturbing here John as.

The economy it's been slowing down over the last.

Six months or so it's not gaining momentum as you would expect that so that the read the numbers are just very troubling him the biggest decline by the way was in defense spending so the private sector GDP was up a bit but not much about one and a half per shot.

There's still a lot of people who are you know constantly look to cut the -- -- the defense budget cut defense spending you know Cha about this program of that program.

This is a cautionary tale.

Well look I actually think cutting government spending is good for the economy because it frees up resources for them.

Private sector so I do think we -- -- the very reason you just mentioned job that we got this enormous.

I doubt that's had a -- 200% of GDP.

We do need to very judiciously cut government spending the problem I have this you know -- -- we've already cut a lot of out of the national defense budget.

Maybe we should be looking at some of these domestic programs that by the way are still growing -- Typically you know when you come out of a recession like we did I guess officially a couple of years ago right typically you start climbing back up and -- -- -- 67%.

Growth what happened.

Well it's like that you know those TV commercials you know help fight the -- and I can't get up and and that's really the whole story of this US economy it's been growing at a little less than 2% on average for the last three years.

-- -- that compares with the average recovery from recession dating back to World War II you know were growing at about one half to 13.

The pace that we should be so this is a very anemic recovery let's keep our fingers crossed that -- that there's a sliver of good news here jot that number so -- -- January pretty strong there you know when there are indications that the housing sector is really picking up steam our energy sector is doing very while so.

I don't expect for another really bad quarter like we -- at the end of the fourth quarter of 2012 I think 2013.

Is looking -- a little bit and that debt as 200%.

Figure compared with our gross domestic product.

That's frightening I mean that's scary and you put your take the words right out of my mouth job when you called this grease like levels.

Of doubt you're exactly right you know -- -- we're still only about a 100%.

But we are headed towards 200% if we keep -- the -- -- -- with very low economic growth and very high levels of -- Then you're right you reach this tipping point.

And you know I hate to say -- but look what has happened with Greece we have people rioting in the streets people are losing their jobs you got twenty for some unemployment that is not the future that we want for America -- more from the Wall Street Journal Steve thanks for bringing it down.

Thank you --

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