Either due to economic fears or outright bankruptcy/foreclosure, Americans are cutting back their debt like rarely before in history.
There’s been a lot of economic pain over the last two years, but the upshot is that Americans have now burned off much the financial burden they added to themselves over the last decade, if we look at financial obligation payments as a percentage of disposable income.
You can see in the chart from Calafia Beach Pundit below how Total Financial Obligations as a % of income have fallen back to 2001 levels. Low interest rates are helping keep payments on financial obligations low as well of course, which is their point, but total private leverage has indeed been coming down.
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