Chart of the Week 08 May 2015
Consumer credit experiences cycles of growth and contraction as shown in this Chart of the Week. Over the last 60 years there have been peaks in the ratio of household debt to salary income every 13 to 16 years: 1965, 1980, 1996 and 2009. All except 2009 have been followed by contractions of leverage amounting to 10% or less; since 2009 the contraction is about 20% so far. The best way for the cycles to play out is a subject of pointed debate between Austrian economists and Keynesians.
History of household leverage is discussed in video after the Read more >> jump.