American Debt and Deleveraging

The amount of household debt, and the process of deleveraging, is an important part of the economic recovery. The fact that American households are trying to repair their balance sheets from the combined problem of running up large debts during the 2000's and suffering from the large negative wealth effect as a result of the housing crisis and declines in the stock market, is a major factor. So, how have American households been doing in this recession and how much more debt deleveraging still needs to happen, are the big questions. The chart below, originally from the New York Fed, but reposted on the Economist's Free Exchange Blog, shows the rise in household debt and how it is slowing be cut down - still a long way to go.