To contrast the gloom & doom from most other market commentary & news, here is your daily dose of optimism.Let’s start with the Senior Loan Officer Survey:
Banks are reporting that, for the first time since 2005, they are seeing stronger demand for consumer loans.
Job openings are once again at their best post-recession level, now the highest in 3 years.
Household liabilities are poised to go flat year-over-year. This is potentially huge.A little background: up until 2000, consumption and household liabilities increased nearly dollar for dollar:
This relationship broke down after the dot-com collapse:
This was the result of the housing bubble — the prices of houses went up dramatically, people went deeper into debt for them, but didn’t spend commensurate to the increase. Since spending = someone else’s income, this was unsustainable, of course, and led to a rash of household deleveraging. This household deleveraging put a $1.255 trillion dollar downward pressure on the US economy in 2009. It put another $712B downward pressure in 2010. It has accounted for just under an average of $200B per quarter (annualised 5.7% of GDP) of downward pressure in the past 12 months. If this is about to go even flat, this is a tremendous pressure relieved from not just the US economy – but the global economy. This possibility is completely unaccounted for in prices.