Consumer Debt Levels Are At Long-Term Average And Falling

With steady deleveraging and extremely low interest rates, there has been some concern that the U.S. could be headed towards a ‘lost decade’ similar to what Japan has been struggling with for nearly twenty years. With no incentive to spend or invest, Japan found itself in a deflationary trap that it only now may have exited, and after five years of deleveraging, the U.S. household debt has dropped to its long-term average and continues to drop. Household debt falls as corporate debt stabilizes Research from Deutsche Bank analysts Matt O’Connor, David Ho, and Robert Placet show that household debt has…