U.S. Household Debt and Savings Rates: Much Ado About Nothing

According to many experts, the economy is at risk of collapsing under the enormous weight of consumer debt. This theory holds that homeowners owe so much money on their mortgages that it’s just a matter of time until they have to cut back on their spending, default on their payments, or both.

It’s true that mortgage debt has increased in recent years. Since 2000, it has gone up by more than 10 percent each year, far outpacing household income, which has only climbed by 4.5 percent a year. And the disappointing performance of the.....

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