Sweet Orange

I just came across some informative numbers from real estate and finance sector analyst Mark Hanson. These numbers provides a follow up on a previous post that I wrote concerning our unsustainable personal debt to income ratio. Hanson quotes the Wall Street Journal:

According to the Federal Reserve, total household indebtedness peaked at the end of 2007 at 132% of disposable income. That was by far the highest level since at least the end of World War II, nearly quadruple the 36% of 1952. By the end of March, with families boosting savings, repaying debt and defaulting, the ratio had fallen to 124%, a tad lower but still miles from the level of, say, 69% in the middle of 1985.
–”Debt Burden to Weigh on Stocks, Consumers’ Inability to Drive Economic Growth Likely to End Big Gains,” E.S. Browning, Annelena Lobb

These numbers shows that our economy on the personal level, not just the national government level, was on a course that could not last. They also show that, with a current ratio of 124% personal debt to income ratio, we are still at an unsustainable personal debt level and will need to endure further corrections.

To see how this personal debt to income ratio has been progressing on this unsustainable course for many years, see my previous post: “Personal Debt to Income Ratio Rose to Over 100%-How Did This Happen?”

GRAPH COURTESY JAMES QUINN