The latest McKinsey report shows there's a long way to go for consumer to de-leverage to reasonable levels. Here are some facts:
* The period of 2003 - 2007 saw US household debt nearly double to $13.8 trillion.
* During the same period household debt-to-income ratio has grown as much as it has in the previous 25 years.
* Since 2003 home equity loans and cash-out refinancings provided consumers with $2.3 trillion of financing. This was everyone's personal cash machine.
* Prior to the financial crisis, personal savings rate as a percentage of disposable income has fallen to nearly zero - the lowest since 1947.
* In 2008 household net worth relative to income has fallen to the mid-1990s level and household net borrowings turned negative (first time in the postwar period). De-leveraging has begun.
* We may need to see the consumer delever by another 27% before we get back to trend.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgTLHZFQ8pQeiREhHcOSt1fCme6oI3gz4szZ78YBO7nJiVy3u8sIX9igrt-iaAtvpObQtEaN61Xkyk_XpuAVDm9f2k-BZmVJpCJnMfBrh-m8deZ5mIvFIguaoBNO5176rYaYNZkM9v-Qe3d/s400/delev.png)
Consumer delevering is not limited to real estate based credit. It also applies to credit cards, auto loans, etc. Here is data from the Fed on non-real estate consumer credit.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgwU9Xf2rZW2ssK-YlSCot-e1_9OujF9q8mGxFKmkfzlvEINjDaAP6h-ekxdVTTOlaAqkoNVBEGi-ObTrXVEKjQG0BXCvmqqiKXg_O5NodTM-OVo4OT35K_3zs8h9A14uBczn9KIGWwBpTW/s400/cons+cred.png)
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