Mortgage Equity Withdrawals as a Percentage of Disposable Income Revisited

In March 2009 I posted a chart from Calculated Risk titled: Equity Extraction Data.  Below is the updated chart showing, as I indicated and as most would presume, that Americans have continued to avoid using their homes at ATMs.  This is most likely due to the fact that the most willing to use this type of debt are probably under water on their primary mortgages.  The other is that those who are not used to tapping their home as an ATM now have a dark reference point for those who did.

Mortgage Equity Withdrawals as a Percent of Disposable Income

Mortgage Equity Withdrawals Q1 2011 (Calculatedrisk.com)

Regardless, high unemployment coupled with comsumer deleveraging could easily make this a decade long “muddle through” period.

Consider for instance, this other chart also from Calculated Risk illustrating the length and severity of joblessness in the US since World War II.

Percent Job Losses in Post WWII Recessions (Calculatedrisk.com)

Not only has this recession been deeper from a jobs perspective than any in the last half century, its on its way to be the longest too.  Interesting to note that the two longest recessions since WWII have been in the 2000’s.

Makes you wonder if this is all part of a greater shift in the global economy.  I am beginning to think that historical data is becoming less and less relevant today, as our most recent recessions are happening faster, lasting longer, and are deeper than any since WWII.  This would be consistent with a general deterioration in our ability to produce anything of value to the global economy.  For three decades we were able to export Western Finance, but post 2008 that is a product that few want or trust any more.  As I have said, Obama wasted the crisis of 2008-2009 on Healthcare when he should have been looking at retooling the American economy with things like green technology and green jobs.  Its hard to see a way out without protectionism, unless the entire American Economy can find a fast way to reboot.

For additional current information on the state of consumer credit, click here for the most recent Quarterly Report on Household Debt and Credit from the Federal Reserve Bank of New York.

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