The amount of money from the paycheck of the average American that goes to service debt is virtually at an all-time low.
The Federal Reserve reports that the average American is spending a dime out of every dollar for servicing the debt they have. Month after month, average Americans have spent less than we’ve made for close to five years now. That creates breathing space in your life.
Now, some of the debt reduction is because people have paid it down and another part of it is because people have defaulted and can’t get new debt anyway.
The fact that we’re not wheezing on debt leads to the possibility of significant economic growth as we look forward because we live in way we can handle our obligations. These changes set the table for stronger growth going forward.
We’re much further along with what the economists call “deleveraging” than most other developed countries.
Editor’s note: This segment originally aired April 30, 2012.