We recently published our big Most Important Charts Of The Year chartbook, wherein we asked the top minds on Wall Street to tell us the one chart they deemed to be really important. We’ve also been breaking some of charts out separately because they are particularly important or very popular.
Through two particular charts you can really see why people are hopeful that 2014 is the year the economy breaks out.
The first chart is this one, which shows that in 2013 for the first time, the household deleveraging cycle came to an end, and households began to add credit again.
It’s popular to decry credit, and to think that credit growth is somehow bad, but that’s nonsense. There’s very little hope for real growth if households keep reducing credit, and there’s nothing wrong with adding credit so long as it’s not going up way faster than overall GDP.
So the growth of credit is a clear positive for the economy.
The other chart, and it’s closely related, comes from Goldman’s Jan Hatzius. It shows that in 2014, the fiscal drag is going to come to an end, as there are no fresh new austerity measures or fiscal cliffs in the cards.
So the story is: Finally US households are done deleveraging, and finally the government isn’t going to kick the economy in the gut with austerity.
Now let’s hope the story comes true.