Economics: How Far Should Consumers Unwind Debt?

More deleveraging to come ...

According to an analysis from Moody's Analytics, total household debt peaked in August 2008 at $12.41 trillion and has come down by about $1.2 trillion.

As a proportion of gross domestic product, household debt peaked at 99.5% in the first quarter of 2009, and has come down to just under 90%.

Economists, who talk about the deleveraging process, say that debt still has a way to come down before the economy will return to full health. Just how far it needs to come down, though, is difficult to say.

As recently as 2000, household debt was less than 70% of G.D.P., and in 1990 it was around 60%.

For more, see How Far Should Consumers Unwind Debt? by Motoko Rich, August 15, 2011 at Economix.