Hugh's post got me thinking. The Fed publishes a lot of fun data if you're an analytical junkie like me. Check out the report on Household Financial Obligations ratios for instance. Here is the average Household Debt Service Ratio (think: debt to income ratio) for the last 30 years.
Is there reason for hope here? Things seem to be nearing a kind of cyclical 'bottom', implying the consumer has paid down some debt, essentially having 'recharged' and is now ready for further debt punishment. :-)
But of course this comes with some 'but's: DSR down at these levels owes a lot to interest rates being REALLY low -- consumers have paid down debt some, but not by as much as is implied by these ratios. If you're down to a DSR of 10% and it's 1980 with interest rates in the teens, you're overall debt is pretty low. If you're at the same 10% ratio with the prime rate at 3.25% you're sitting on a lot more debt.
What's it all mean? I'm not exactly sure. But it's interesting.
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