In this post<\/a>, he takes on the overly-accepted conventional wisdom, that the US consumer remains massively overleveraged, and has years and years of deleveraging yet to go through, before returning to health.<\/p>\n First he notes this well-traveled debt-to-GDP ratio, which ostensibly shows the great consumer leveraging<\/p>\n But the kicker is that it was mainly the poor — the bottom 20% — that really leveraged to the hilt:<\/p>\n If you exclude the bottom quintile, things don’t look quite so ridiculous.<\/p>\n Wilmott<\/a> concludes:<\/p>\n One could usefully get a lot more granular than that, but the more interesting point is why we find it so emotionally satisfying to believe that US consumers have become irrationally and fecklessly over-borrowed when the facts don’t really live up to the caricature.<\/p>\n The debt story is really about the cyclical vulnerability of consumer spending, not a structural obstacle to future spending that matters even when income grows. The distinction is critical. Full recovery of consumer spending can occur with house price stabilisation and a return of income growth. It has little to do with getting the savings rate or debt-income ratio to certain levels.<\/p>\n Follow his full blogging at FT Alphaville all day >><\/a><\/p>\n Join the conversation about this story »<\/a><\/p>\n See Also:<\/b><\/p>\n Jonathan Wilmott, chief global strategist at Credit Suisse, is guest-blogging for the day over at FT Alphaville, and has already produced a number of gems. Here for example is some good analysis of the latest from the Bank of Japan. In this post, he takes on the overly-accepted conventional wisdom, that the US consumer remains […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-56819","post","type-post","status-publish","format-standard","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/56819","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/comments?post=56819"}],"version-history":[{"count":0,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/posts\/56819\/revisions"}],"wp:attachment":[{"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/media?parent=56819"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/categories?post=56819"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mereja.media\/index\/wp-json\/wp\/v2\/tags?post=56819"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}<\/p>\n
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