This Awesome Brookings Presentation Explains Why The Monster Deleveraging Wave Still Has Way More To Go

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The story of the U.S. consumer in 2011 has been dominated by the threat of deleveraging.

All of that debt repayment means there is less money to spend on goods, including everything from cars to video games.

And that deleveraging process may be about to get much worse, according to Brookings.

They see an expansion of the process in 2011, but are unsure whether it’s actually going to effect consumer spending.

Source: Brookings

Source: Brookings

Deleveraging is also about consumers taking on less debt.

Source: Brookings

And loan defaults have reduced the amount of debt.

Source: Brookings

That's evidenced by states hit the hardest by the housing bust.

Source: Brookings

This process may only be beginning.

Source: Brookings

And consumers may still have to pay much more until we get back to pre-bubble levels.

Source: Brookings

Mortgage defaults will play a part in further deleveraging.

Source: Brookings

Source: Brookings

Leverage and consumption are not connected.

Source: Brookings

Fear might be a driver behind deleveraging.

Source: Brookings

But it's hard to tell.

Source: Brookings

Source: Brookings

It is becoming easier for investors to borrow.

Source: Brookings

Banks are loosening standards.

Source: Brookings

Credit card limits are starting to bottom out.

Source: Brookings

It's hard to tell if and when households will be confortable with their debt again.

Source: Brookings

Unsure whether defaults will actually hurt spending.

Source: Brookings

Both are falling.

Source: Brookings

Credit will be hurt for those who default.

Source: Brookings

Credit scores remain mostly flat.

Source: Brookings

Banks could pull back on lending again.

Source: Brookings

Deleveraging is a good thing in the long run, and unknown in the short term.

Source: Brookings

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