While the U.S.’s budget problems have been a subject of much worry in recent years, Charles Schwab Chief Investment Strategist Liz Ann Sonders says good news has developed on that front.

“Here is a story still under-told. The US federal budget deficit is plunging,” Sonders writes in recent commentary on Schwab’s site. “It’s been in a steady decline for over four years; but the pace at which it’s improving has really picked up in the past year, particularly last month. About two-thirds of the improvement has come from the spending side, with the remainder on the revenue (tax receipts) side.”

The private sector has also been going through an impressive deleveraging, Sonders says. Since hitting a high of nearly 130% of disposable personal income in 2007, household debt is down to 105%, she says, noting, “That is now well below the long-term trendline; and is even flirting with the ex-bubble trendline.”

Sonders says that it’s important to look at recent economic growth in the context of the public sector deleveraging. “Much has been said about the ‘new normal’ rate of economic growth; sometimes referred to as ‘stall speed’ growth,” she says. “But that’s inclusive of government. Less noted is the ‘old normal’ rate of growth by the private sector. Since the recession ended in June 2009, the overall average rate of growth of US real gross domestic product (GDP) is a relatively paltry 2.1%. However, excluding the government (federal, state and local) sector, the average pace of real GDP has been 3.1% over the same period. It shows that the government can and should continue to deleverage without tanking the economy, thanks to the relatively healthy private sector. This is encouraging; especially since the government sectors deleveraging is already paying deficit dividends.”