A moment of downtime before a speaking gig tonight, and I stumbled on two slightly uplifting reports on the economy!
The first suggests that households have largely completed their debt deleveraging cycle. Maybe, but the indicator to look for here is not simply whether the statistic shown in the figure below–debt payments as a share of disposable income–is back to pre-recession levels. It’s whether it’s starting to climb again. Not that you want to see the beginning of another unsustainable debt cycle…but as long as household leverage measures are trending down, the correction probably ain’t over.
The second report is more of a mixed bag. State revenues, which lag the broader recovery, are climbing back to pre-recession levels, but as my CBPP colleagues point out, states and cities have been aggressively cutting spending and jobs, and that hurts both communities and slows the national recovery.