"Despite spending less time at the mall, throttling back consumption, and increasing their savings rate, the US consumer still finds themselves with too much debt and too little savings. Even worse (at least for the economy), they lack the income or the equity to fund their previous lifestyles."
A couple of things deserve mention:
- The graphs are fascinating. They show that as a percentage of net worth the amount of debt had actually gone up since equity and real estate prices have fallen.
- Adjustments since as reducing debt and/or increasing savings take time. This story is not over. It will continue to play out over the next few years as firms and households shed debt. Of course the implications of this on the economy are not particularly rosy.