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Which brings me to one of the mainstream medias favorite stories of the post bust period since 2009, “The Consumer is and has Deleveraged” implying that they have cleaned up the household balance sheet, reduced their debt levels and are ready to start a new credit cycle of borrow and spend, an important component of economic recoveries. Looking at aggregate consumer debt which includes mortgages and of course the millions of post 2008 foreclosures and significant drop in the homeownership rate as a result combined to bring down consumer debt levels sharply. But this masked an inconvenient truth, the lack of earned income growth and poor quality jobs that were a hallmark of the post bust era meant that consumers continued to pile on debt to keep up. At the end of the crisis period in 2009 total consumer debt excluding mortgages totaled 2.6 trillion, it has now reached 3.7 Trillion and most of that compliments of rapidly rising student and auto loan debt. The previous highwater mark for this series was a bit less than 2.7 trillion in 2008. The one non-mortgage debt class trailing the 2008 highs is credit cards. It is rising rapidly and approaching a Trillion dollars outstanding. At its current pace, it should exceed the 1.02 Trillion achieved in 2008 late this year or early next. And our economic and political leadership wonders why economic growth is so anemic despite record low interest rates, trillions in quantitative easing and other misguided polices that have benefited Wall Street, the Banksters, Corporate America and the 1% at the expense of everyone else.

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