Some facts not to be ignored

[Randy Divine]

October 11th 2007, the last time the stock market closed this high

Dow Jones Industrial Average: Then 14164.5; Today 14,253.77
Regular Gas Price: Then $2.75; Now $3.73
GDP Growth: Then +2.5%; Now +1.6%
Americans Unemployed (in Labor Force): Then 6.7 million; Now 13.2 million
Americans On Food Stamps: Then 26.9 million; Now 47.69 million
Size of Fed's Balance Sheet: Then $0.89 trillion; Now $3.01 trillion
US Debt as a Percentage of GDP: Then ~38%; Now 74.2%
US Deficit (LTM): Then $97 billion; Now $975.6 billion
Total US Debt Oustanding: Then $9.008 trillion; Now $16.43 trillion
US Household Debt: Then $13.5 trillion; Now 12.87 trillion
Labor Force Particpation Rate: Then 65.8%; Now 63.6%
Consumer Confidence: Then 99.5; Now 69.6
S&P Rating of the US: Then AAA; Now AA+
VIX: Then 17.5%; Now 14%
10 Year Treasury Yield: Then 4.64%; Now 1.89%
USDJPY: Then 117; Now 93
EURUSD: Then 1.4145; Now 1.3050
Gold: Then $748; Now $1583
NYSE Average LTM Volume (per day): Then 1.3 billion shares; Now 545 million shares

Source: Tyler Durcen at ZERO HEDGE

 

[The Stig]

US Household Debt: Then $13.5 trillion; Now 12.87 trillion

Interesting this ^^^. I would've thought US Household Debt would increase, too.

With the stock market higher, obviously (?) money is continuing to flow from consumers to businesses. Or, at least, businesses feel confident that consumers will continue to, um, consume...

More cash expenditures and less CC purchases?

 

[The Stig]

One other thing...

With the USD devaluing, wouldn't this cause debt to increase?

 

[Liberty1911]

One other thing...

With the USD devaluing, wouldn't this cause debt to increase?

No, devalued dollars make it easier to pay off debt.

 

[GodFearinGunTotin]

US Household Debt: Then $13.5 trillion; Now 12.87 trillion

Interesting this ^^^. I would've thought US Household Debt would increase, too.

With the stock market higher, obviously (?) money is continuing to flow from consumers to businesses. Or, at least, businesses feel confident that consumers will continue to, um, consume...

More cash expenditures and less CC purchases?

I wonder if it has something to do with home foreclosures.

 

[The Stig]

No, devalued dollars make it easier to pay off debt.

I agree with this in theory, but if a gallon of gas costs more it takes more USD to pay for it therefore increasing outflow of cash (or credit).

I used to spend $1.00 for gas, now $4.00.

The stat in the OP shows household debt decreased over time.

If people are paying more for "stuff" how can household debt decrease?

People not buying as much "stuff?" If that is the case, why are markets maintaining or surpassing previously held levels? (Even accounting for devalued USD?)

Not arguing, I promise. Just trying to wrap my head around it.

 

[Tsigos]

I agree with this in theory, but if a gallon of gas costs more it takes more USD to pay for it therefore increasing outflow of cash (or credit).

I used to spend $1.00 for gas, now $4.00.

The stat in the OP shows household debt decreased over time.

If people are paying more for "stuff" how can household debt decrease?

People not buying as much "stuff?" If that is the case, why are markets maintaining or surpassing previously held levels? (Even accounting for devalued USD?)

Not arguing, I promise. Just trying to wrap my head around it.

Seems like many companies don't have to make money today to support a high stock price. It's like the stock itself has become the commodity in some cases.

Love Top Gear BTW.

 

[Smokepole]

US Household Debt: Then $13.5 trillion; Now 12.87 trillion

Interesting this ^^^. I would've thought US Household Debt would increase, too.

You have to remember, when the economy tanked, after a while people started to cut up their credit cards and pay cash knowing what was coming. Others borrowed and/or took cash out of their retirement accts. and paid off debt. A LOT of others went bankrupt and got rid of a LOADS of debt that way. Others simply paid debt down the old fashioned way. Given all of that I'm a little surprised that the reduction isn't greater.

With the stock market higher, obviously (?) money is continuing to flow from consumers to businesses. Or, at least, businesses feel confident that consumers will continue to, um, consume...

More cash expenditures and less CC purchases?

Yes. Absolutely.

I agree with this in theory, but if a gallon of gas costs more it takes more USD to pay for it therefore increasing outflow of cash (or credit).

And with J.Q.P. spending less on luxuries and cutting expenses he has more $$ to spend on gas while NOT using credit.

I used to spend $1.00 for gas, now $4.00.

The stat in the OP shows household debt decreased over time.

Household debt decreased by $63BB. U.S. Debt INCREASED by 82% (Total US Debt Oustanding: Then $9.008 trillion; Now $16.43 trillion)

U.S. Debt virtually DOUBLED (Then ~38%; Now 74.2%) (% of GDP)

If people are paying more for "stuff" how can household debt decrease?

Cash, no credit! And less stuff. Why do you think Economic growth is an anemic 1.6% (IF that is indeed the REAL number)

People not buying as much "stuff?" If that is the case, why are markets maintaining or surpassing previously held levels? (Even accounting for devalued USD?)

Companies have been shoring up balance sheets, reducing debt (also spent years with severely limited credit availability), streamlining and increasing efficiencies and in general doing better and in some cases more with less. And the people out there that use the markets to make money - day traders & Mutual Funds, etc. - are putting their money where it can best work for them now. When that changes they will go wherever they have the best shot at making more. Commodities are too volatile these days and gold an silver values are being suppressed.

Not arguing, I promise. Just trying to wrap my head around it.

It's topsy-turvy out there right now. Some stuff doesn't appear to make any logical sense.

 

[rvb]

I agree with this in theory, but if a gallon of gas costs more it takes more USD to pay for it therefore increasing outflow of cash (or credit).
...
If people are paying more for "stuff" how can household debt decrease?

If you bought that gas a year ago on credit, because the gas costs more today due to inflation (dollar worth less), then the debt is easier to pay off.

An extreme example... assume national average 100k for a house 5 years ago. 30yr loan, struggling to make ends meet. If 5 years from now the average house is worth 300k (only looking at dollar value not other realestate drivers), and average income is adjusted to follow the dollar (eg min wage increases, etc), then the $100k house becomes easier to pay off.

Extreme extreme... if you are carting wheelborrows full of cash to the store to buy bread/milk (eg Weimar Republic), how hard will it be to pay off your existing mortgage? Who cares if a new house is eleventy-billion-dollars, we're talking paying off existing debt when your current monthly payment is maybe no more than a loaf of bread?

Most likely reason for reduced debt... increased forclosures and bankrupcy combined with reduced willingness of banks to lend to risky borrowers combined with a reduced workforce able to borrow or make large purchases.

-rvb

 

[bw8755]

I'd bet a ton of bankruptcies caused a fair amount of decrease in household debt.

 

[ZombieApocolypse]

I'd bet a ton of bankruptcies caused a fair amount of decrease in household debt.

I was thinking the same thing, along with the fact these last 5 years or so more Americans have been paying off their debt(s) rather than getting new debt