> Actually, most of the debt growth in the 1990s and early 2000s was
> mortgage-related, not credit cards.
Ah, you're right. Those figures are only for non-mortgage credit.
> 53% of income growth in the first quarter came from transfers, and 43%
> from wages & salaries.
Yeah, but the question is what financed consumption growth - was it sustainable?
Non-transfer income grew by $73.5bn. Transfer income grew by $61.5bn. Total taxes grew by $93.3bn. That leaves only $41.7bn in disposable income growth. Yet personal outlays increased by $130.4bn (which drove GDP growth in Q1). So personal saving fell $88.5bn.
That means PCE growth was financed 68% by reduced saving and 32% by higher income - but almost half of the income growth came from government transfers.
Whether reduced saving came from borrowing or from running down balances, either way it's not sustainable. Households have not repaired their balance sheets. You yourself said the Obama-Geithner plan was to roll things back to the unsustainable world of 2006, and they have, qualitatively if not quantitatively. In fact, households may well have been running down saving in response to the temporary boost to home values from the tax credit. How so very 2006. Plus, the stimulus will start petering out in the second half.
SA