Americans Are On the Cusp of Another Borrowing Binge
After a decade spent catching up, U.S. households have seen their wealth soar with rising home prices, setting up the nation for a spending spree.
Soaring home values are a big part of Americans’ growing wealth.
Source: Bloomberg
Investors are concerned the U.S. is headed for a repeat of the lackluster economic expansion of the prior decade — that once the country gets past reopening pains, it will resume the same modest-but-steady growth that was interrupted by the pandemic. The plunge in 30-year Treasury yields last week after a hawkish turn from the Federal Reserve only heightened the sentiment.
But that view overlooks a key factor that held back the economy in the 2010's and that should now boost it through the 2020's: household balance sheets. Americans are richer than ever before thanks to a booming stock market coupled with a surge in home values. And households aren't burdened with the same level of debt that dragged on spending in the years following the 2008 recession. That should mean faster growth in the years to come as Americans again feel free to borrow.