Tuesday, June 28, 2016

Debt to Income ratio is an indication of more deleveraging to come

If you simply look at the rate in which the deleveraging has taken place so far, it could actually take another 6 or 8 years. 

Now that's just putting a ruler on trend. 

I think, for example, consumer debt in this country-household debts from credit cards, student loans, auto loans in relation to assets to after-tax income, which is normally how you look at it-the norm was 65 percent debt-to-income. In the early 80's it took off to 130 percent and it's now down to 104 percent so it's a long way from the norm and, as I say, if you just project where we are it could take another 6 or 8 years.