National debt vs. national income

American Debt

American Debt

This is an interesting chart from Michael Hodges showing the total debt load in America versus the national income.  When I say, “interesting” what I really mean is “disturbing.”

You don’t have to be an economist or statistician to understand the relationship between the blue line and the red line.  Simply put, Americans as a whole are spending much more than Americans are making.  Our entire consumption-based society is a house of cards.

I’m not an alarmist and I don’t have a crystal ball, but it certainly seems unlikely that this situation is sustainable.  Could we be in for another bailout?  Another market crash?  What will that mean for inflation?  You can visit the inflation calculator if you’re curious about the history of it all.

If the average American household is buried in debt, the average American household will inevitably have trouble making the mortgage payment every month.  If you consider the unemployment rate and decreasing home values across the country, you can see why I’m camped-out in mortgage default capital of the country.  Our housing and economic woes are not going to be resolved anytime soon.

For professionals working in the real estate industry, Mangled Mortgage will teach you everything you need to know to serve your clients in this market.  Follow the link for ordering instructions.  Luck favors those who take action.

1 Comment

  1. March 23, 2009 at 12:12 PM

    Yes, this is a huge problem. This SNL video is great and a nice complement to your post:

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