Although consumer debt is at an all-time high, consumers themselves got the message during the last crisis: Pay down debt, own more assets.
That’s taken the U.S. household debt-to-asset ratio to levels last seen in the 1970s, around the time the U.S. went off the gold standard:
Households, unlike government, have paid down their debt and benefited from rising asset prices (Source: FRED)
Contrast that with government. The U.S. government, still enduring its longest “shutdown” ever, managed to grow its debt by half a trillion dollars – while its doors were officially closed!
Rising government debt, moreso relative to GDP than the total value, is on the precipice of full-blown crisis level. When the government gets into trouble, households need to be prepared.
We expect the end of AI buildout euphoria in the stock market may be the catalyst. What you can do right is get your own financial house in order. Pay off debt. Own hard assets. Don’t borrow to invest in the stock market.
~ Addison
P.S. We’ve invited Bloomberg’s #1 employment analyst Andrew Zatlin, to join us tomorrow on Grey Swan Live! for obvious reasons:
Andrew Zatlin — the #1-ranked economic forecaster on Bloomberg and one of the most connected data minds in finance.
For decades, Andrew has helped billion-dollar hedge funds stay three steps ahead of Washington’s chaos, consumer shifts, and global supply chain shocks.
As unemployment ticks up, politicians trade on insider intel, and Pelosi closes out an era, he’ll reveal what his data is signaling next — and what investors should prepare for.
If you have requests for new guests you’d like to see join us for Grey Swan Live!, or have any questions for our guests, send them here.
