Americans Too: IMF Warns Record US Household Debt Is 'Economic Trap'

Danielle Park, CFA
By Danielle Park of Juggling Dynamite
Portfolio Manager •

S household debt is back at pre-Great recession levels hitting $12.84 trillion in the second quarter of 2017.

The International Monetary Fund devotes two chapters of its latest Global Financial Stability Report to the issue of household debt and points out:

    • High household debt levels deepen and prolong economic recessions.
    • US household debt is back at pre-Great recession levels hitting $12.84 trillion in the second quarter of 2017. The report offers this flowchart of the loops between debt, cash flow, demand and the economic cycle.

Pretty common-sense stuff. Yet, widely ignored by the monetary policy of central banks everywhere.

Disclosure:

None.

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