On last night’s show, we discussed the vanishing savings rate (Dismissed as unimportant by Jim Glassman) and the Asset to Debt ratio — which is reminscent of the same old argument in 1999: The asset then was equities, the asset today is real estate.
Lets now look at a different ratio:
U.S. Disposable Personal Income as a % of Gross Domestic Product (Current $)
Source: Mike Panzner
The total amount of money Americans have to spend after taxes relative to overall output of goods and services has hit the lowest level in 25 years.
Remember, Debts are forever, while Assets are subject to markets forces and variable pricing!