Tuesday, September 13, 2016

Putting numbers on vigor (5: A look at the Debt Projections)

I'm going back to the three projections we started with yesterday, the ones I decided to keep. I'll even keep the red, green and gold colors for the projections, as we won't be adding any more lines to the graph.

Graph #1: Household Debt and Three Projections to 2025

Here's a look at the growth of those numbers:

Graph #2: Percent Change from Year Ago, Household Debt & Projections
Oh. These don't seem to be realistic projections of debt growth. Not that they are too smooth, but that they level off so quietly. They gradually top out rather than rising to a vigorous peak. It doesn't seem right. It doesn't seem to be the way debt normally behaves. What can I do to check this?

I'll compare these projections to the bowl of the 1990s.

After 20 years of economic sluggishness, what did household debt look like when we were coming out of the bowl, transitioning to the "new economy" of the latter 1990s? It looked like this:

Graph #3: Percent Change from Year Ago, Household Debt 1988-1996
A gradual transition. No vigorous peak. It quietly levels off. And it levels off at about 7.5%, just like the red line on Graph #2. Talk about coincidence!

Okay, I changed my mind. I like those Graph #2 projections.

// the Excel file

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