The above chart from Morgan Stanley looks at the contributors to the quarterly change in household debt.
So in other words, you can see that prior to the economic collapse of 2008, US households were taking on more and more debt each quarter, and by far mortgage debt was the big contributor to it. By far.
Then when the credit crunch happen, households were delevering in every area with the exception of student loan debt which has always stayed positive.
Now households are actually relevering a bit. Student loan debt is significant. Car debt (in green) is picking up, and now even mortgage debt has recently grown for the first time in years. Home equity debt continues to get paid down, though it too may turn green before too long.
So not only is debt growth very low still after years of being negative, it’s composition is totally different, with mortgage debt not moving the needled much at all.
The upshot is that household balance sheets are far more stable than they were back in 2007, or as Morgan Stanley puts it, much better positioned for a rate rise.
An thanks to the declining debt and declining interest rates, Americans have basically never had an easier time making their debt payments, as this chart shows.
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