After a long period of consumer retrenchment, U.S. families have cut their once-out-of-control debt loads down to pre-recession levels, largely removing one major obstacle to a faster economic recovery. The amount of home mortgages, credit card debt and most other consumer liabilities now stands on par with 2006 or earlier, according to calculations by Moody’s Analytics. The notable exception is student loans, which have skyrocketed in recent year as college enrollment and costs have soared. Overall, households today are paying less than 16% of after-tax income to cover debt payments and lease obligations, the smallest share since 1984, Federal Reserve data show. Few experts are expecting a big ramp up in people’s spending anytime soon, The Los Angeles Times reports, and many economists remain wary about the economic outlook. “It’s sort of a new reality that you have,” says Jack Ablin, chief investment officer at Harris Private Bank in Chicago. “We’re going to try to live within our means because living beyond it didn’t work out.” More details and analysis are available in the full story here.
Today’s poll question: How does your total debt load now compare to its level in 2006?
