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Household debt to blame for struggling economy

Private sector debt is partially to blame for the floundering economy.

Private sector debt is partially to blame for the floundering economy.

A recent CNNMoney article explained that the struggling economy can be attributed in part to the large mount of household debt that still exists.

According to experts, the amount of debt owed by households and businesses is more concerning than the largest amount of current government debt. In addition, the experts believe that as long as unemployment rates remain high and growth continues moving slowly, the economic worries will continue.

"I think it's one of the major headwinds we're fighting against right now," David Wyss, a visiting fellow at Brown University and former chief economist at Standard & Poor's, told CNNMoney.

The amount of private sector debt, which represents that owed by households and businesses, peaked in 2008 at 283 percent of the gross domestic product. This amount has since declined slightly, falling to 234 percent at the end of 2010. However, while improvement has occurred, the high amount of debt is still too much for many households.

According to Carmen Reinhart, a senior fellow at the Peterson Institute for International Economics, told the news source that the country could still be in for a lot of disappointment if the current "norms hold," as "deleveraging isn't pretty and … is not a smooth process."