Overall debt, public and private, has grown from $4.6 trillion in 1985 to $20.1 trillion in 2002, an increase of 340%. During the same time, the economy grew by "only" 160%, so total debt has grown about twice as fast as the economy. The doomsday press loves to quote this fact, but let's look at the details. First, interest rates have come down. In 1985, the yield on Aaa corporate bonds was 11.4%. Today, that yield is 6.3%, so the cost of serving today's debt is up only 142%, less than GDP growth.
Also, total household debt service was at the same levels as today (14.34% of national income) back in 1986. Despite that "excess" of debt, corporate profits surged for the next two years. In 1987, U.S. corporate pretax profits rose 29.3%. They rose another 21.4% in 1988, for a two-year gain of 57%. (The stock market went in the opposite direction, falling 35% in late 1987, similar to the mid-2002 market collapse, despite growing corporate profits.)
Household debt is the same now (14.4%) as it was in 1986. Even more significant is the breakdown of that debt. The fastest-growing debt sector has been mortgages. Mortgage debt grew by 1,164% between 1985 and 2002 and now accounts for 23% of total U.S. debt. That debt merely reflects the cost of owning a growing asset, your own home. While the mortgage part of household debt service has risen, consumer debt has declined as a percent of total debt.
Consumer debt service was 8.48% in 1986, but was down to 7.76% in 2002.
http://www.investorplace.com/free/diw_free_053A.php