US Household Debt Simply Isn’t A Problem At These Levels


Yes, of course, we’re in an election season. Therefore the assertions of politicians a re somewhat less reliable than usual. One of those unreliabilities being the insistence that the current level of household debt in the US is a problem.

The fact is that subprime auto debt is falling and the balance and default level just isn’t anything unusual either. That much vaunted mountain of student debt is just not out of line with historical average. We don’t, therefore, need radical restructuring of society to deal with debt that’s not unusual:

Do We have A Problem Here?
Again, please note, this isn’t to take a pot shot at any one candidate’s preferred economic problem. Rather to point out only that the size of the debt is not a problem for the economy as a whole. Similarly, not to tread on political toes, low income households have a different set of problems and so on. But household debt, as an aggregate factor, in the US economy just isn’t a particular problem. Leading to Moody’s conclusion: … households are managing their debt and other financial obligations extraordinarily well. Household credit quality is about as good as it has ever been. The U.S. economy has its problems, but household debt is not one of them.

It’s not going to stop politicians whingeing about it of course but then pretty much nothing does. Perhaps only the two or three weeks each four year cycle that isn’t considered to be part of an election season….