Monday, May 23, 2016

Aimlessly looking at economic data

Spend enough time aimlessly looking at economic data and eventually you'll find something interesting. I had total private non-financial debt on the screen, and suddenly wondered how it compares to consumer debt. Consumer debt is a subset of total private non-financial so it is worth a look.

Graph #1: Household Debt relative to Total Private Non-Financial Debt
First thing I notice: two big humps -- one in the 1990s and one in the 2000s.

Second thing: It is jiggy early, till around 1990, and smooth after that.

Third, it's about fifty-fifty. From 1950 to 2000, the curve is pretty well centered on the 0.50 line, and pretty well contained between 0.46 and 0.54. In other words, household debt runs between 45% and 55%  of private non-financial debt until just after the year 2000. Then household debt goes high, something I've heard other people say.

If the household portion of private non-financial debt is roughly half the total, that means the rest of private non-financial debt is also roughly half the total. Or again, was roughly half the total, until the year 2000. Something I didn't know.

Fourth, the peak in the mid-1960s and the peak in the mid-1990s both top out at about 54% (0.54 on the graph). That's quite a coincidence. In addition, the upslope in the 1960s is comparable to the upslope in the 1990s. The two downslopes are similar also:

Graph #2: Similarity in the 1960s and 1990s
What makes this interesting is that the 1960s and the 1990s are our two best decades of economic performance.

At the high point of the 1960s,

Apparently FRED is down.

1 comment:

The Arthurian said...

What I was getting to next, except FRED was down, was that debt was a lot higher in the 1990s than in the 1960s. That doesn't show up on the graph, because the graph shows a ratio.

And re-reading what I wrote, I come to this:
... household debt runs between 45% and 55% of private non-financial debt until just after the year 2000. Then household debt goes high ...
Yeah. But of course both debt measures were higher in the mid-1990s (and after) than in the mid 1960s. When I say "household debt goes high" after 2000, I mean high relative to the other debt measure. That should be obvious from the context -- the graph shows a ratio -- but you never know.