This has unquestionably been the weakest recovery in generations, but it's hard to get pessimistic when household finances and balance sheets are as strong as they've been in over three decades.
Last week the Fed released its calculations of households' financial burdens (debt service and financial obligation payments relative to disposable income) as of the end of September 2014 (see chart above). By this measure, financial burdens have not increased at all for almost two years, and they are as low as they have been in over three decades. Household finances haven't been this good for a long time.
One of the defining characteristics of the current business cycle expansion has been risk aversion, which includes deleveraging. As the chart above shows, households' leverage (total liabilities divided by total assets) has declined by more than one-fourth since early 2009. That's the byproduct of zero growth in household liabilities alongside a 38% increase in assets.
And lest you think that it is just the ultra-rich getting even richer, the chart above shows that real per capita net worth has now surpassed its 2006 peak. There's been significant wealth created during this recovery, and it has not been financed by funny money or a credit boom. On the contrary, it's real. Worker productivity is up 10% and corporate profits are up about 50% from pre-recession levels.
Sure, things could be better, but they are nevertheless getting better.
0 Response to "It's hard to get pessimistic"
Posting Komentar