The Q2 US balance sheet is out via the Fed’s Flow of Funds statement and it reveals that household debt (home mortgages + consumer credit) as a % of disposable income fell to 118% from 120% in Q1 and 123% at the end of ’08 and vs the record high of 127% in ’06. It was last below 100% in 2001 and was at 89% 10 years ago so while we are headed in the right direction in terms of consumer financial health, the process could be a long one. According to the data, the value of household real estate ROSE by $323.4b which is strange considering home prices have continued to decline, albeit at a slower pace. This, in addition to a $1.6t rise in stock prices, led to an almost $2t rise in net worth. For the country as a whole, debt as a % of GDP was little changed at 360% due to an increase in government borrowing at all levels and this is up from 257% 10 years ago.