Wednesday, April 14, 2010

The growth of household debt

(adapted graph from Calculated Risk) - click on image to enlarge


Sobers said...

Looks like 2000 was where it started to go wrong. I always said we should (based on previous UK economic history) have had a recession then. Traditionally inflation would have started to pick up, rates would have had to rise, kicking over the punchbowl. Instead we had cheap Chinese imports and a dodgy inflation index courtesy of Gordon Brown, who believed his own hype. The boom would continue forever. I remember serious articles circa 2005/6 predicting average house prices reaching 300-400K within 10 years. I thought it was mad then. It looks insane now.

Paddington said...

Isn't all of this debt just a way to hide the underlying inflation?

Sackerson said...

Sobers: the graph is for the US, it seems harder to get info like this for the UK but I guess it's similar. Then we need to add on growth of government debt - this from last year compares US & UK total indebtedness:

- it seems "financial debt" is the real shocker.

Paddington: I think the growth of personal debt is a result of deflation (or no-real-growth) of median wage rates.