U.S. CONSUMERS DELEVERAGING FAST
Deleveraging is happening fast through higher savings, defaults and low interest rates, in spite of the very slow gain in Personal Disposable Income since 2008. PDI should begin to rise faster when employment gets positive again, which could happen pretty soon. Biggest unknown: taxes to repay the economic and banks bailouts.
The Federal Reserve’s financial obligation ratio tracks how much the average American must cough up every month for rent and payments on credits cards and mortgages, as a percentage of disposable income. The ratio fell to 17.51% in the fourth quarter of 2009, down from a peak of 18.87% in early 2008 and the lowest level since the third quarter of 2000.
Full WSJ article
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