Wednesday, December 23, 2009
Every time I post an update of this chart I seem to get a number of incredulous responses. What the chart shows is that households' financial burdens are, on average, lower today than at any time in the past five years. Moreover, they are not any worse today than they were in 2001, and financial burdens have not risen materially for the past three decades. What most people believe, however, is very different: there seems to be a consensus out there that households are over-stretched and over-burdened by debt. Many people have indeed succumbed to mortgage and credit card debt, but the great majority, as suggested by this chart, have managed to stay afloat and have even reduced their debt burden over the past two years. It's very hard—if not impossible—to get from this chart to a conclusion that there is anything seriously wrong with households' finances.
I think this is very supportive of an optimistic outlook for growth going forward.
Posted by Scott Grannis at 12:00 PM