Jerry Khachoyan — Is The Consumer Getting Squeezed?

Some light glimmering in the tunnel of wage darkness?

The Armo Trader
Is The Consumer Getting Squeezed?

Jerry Khachoyan

Scott Fulwiller — Functional Finance and the Debt Ratio—Part I

This five part series will explore at length (warning!) and in detail (another warning—wonk alert!) the MMT perspective on the debt ratio and fiscal sustainability. While the approach suggests a macroeconomic policy mix and strategies for both fiscal and monetary policies that most neoclassical economists currently believe are unsustainable, ultimately the MMT preference for a significant role for fiscal policy in macroeconomic stabilization is shown to be consistent with traditional neoclassical views on fiscal sustainability.

This first part defines the correct measure of the national debt and then looks at the mathematics of debt service and the debt ratio.

New Economic Perspectives
Functional Finance and the Debt Ratio—Part I
Scott Fulwiller | James A. Leach Chair in Banking and Monetary Economics and an Associate Professor of Economics at Wartburg College

Household debt down to levels not seen since the 1980s!

(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.