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 fallen to...