Household Debt

From BusinessWeek, a couple charts that merit serious consideration...

The takeaway here is that renters (the black bars) have seen their financial obligations (as a share of disposable income) decline since 2000. "Homeowners"* have seen their obligations rise. Homeownership has its benefits, but it has its costs too. And as we've noted here before, those costs are often understimated.

The second chart (the ratio of household debt to GDP) makes a very important point: What we've witnessed over the last few years is not a housing bubble per se. It's a lending-and-borrowing bubble more generally. Household balance sheets--to say nothing of public ones (see below)--are a mess. And it's time to start rebuilding them.

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* The snarky quotation marks, obligatory in this space, are meant to suggest the inaccuracy of calling over-leveraged house-occupiers "owners." Of course there are many, including many who are carrying mortgages, who should be called owners. But given conditions in residential real estate, the term "homeowners" has become woefully imprecise.

National Debt Clock