Jill R Shah at Bloomberg writes that U.S. household balance sheets are in the best shape they have been in years. “Across a number of measures, consumers are flush…” (Bloomberg)
- Debt is way down. Consumer debt as a percentage of gross domestic product “is now well below the latest peak and back to levels seen on average in the early 2000s.”
- Assets are up. Thanks to a never ending bull market and rising home prices, household assets have climbed during the economic recovery. “That’s reduced the aggregate liability-to-asset ratio, making Americans feel better off.”
As Americans feel better about their finances they are more likely to plan and follow through on big life decisions. This includes such things as moving locations, buying a house or having a baby. “These plans translate to a willingness to spend, Mish said. They also underscore economists’ forecasts for economic growth in 2022 and 2023 that outpace the pre-pandemic trend.”