Consumer Debt – Still A Long Way To Go

streettalklive.com / By Lance Roberts / 
I have seen numerous articles as of late discussing how the average American family has finally delevered their household balance sheet at last.  This would be good news as lower debt levels means more personal savings which would lead to productive investment.  It would also mean more consumption that would provide stronger end demand to businesses.  Both of these outcomes are necessary for sustained economic growth.  The chart below has been used repeatedly to argue the deleveraging case for the economy.

At first glance the case of such deleveraging is clear.  Households have develeraged, however, household debt to GDP is a bit misleading because GDP includes all activity of the economy including corporations and government.  What we really want to know is how has the average American family is fared in this process.  This is important to know considering that Personal Consumption currently makes up more than 70% of the economy as shown in the first chart below.
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