(h/t to Matt Franko on this)
It looks like household balance sheets are really starting to become quite healthy. Check out the chart of the Fed’s “Financial Obligations Ratio.” It’s a measure of the total amount of monthly debt service (mortgage, rent, car payments, insurance, credit cards, etc) for an average household, as a percentage of its income. The lower the ratio, the less of a burden monthly debt service is. As you can see, the burden is quite low. In fact, this chart shows and amazing improvement. Total debt service as a percentage of income is now down to the levels not seen since the 1980s. This means if we can get through all this fiscal cliff and debt ceiling bullshit, we really could have a big expansion in the economy and a stock market boom.
