More Evidence Supporting the House of Debt (book review)

AUGUST 8, 2014

BY

More Evidence Supporting the House of DebtEconomists of all stripes are baffled by continued economic weakness in the United States. The easiest way to see the weakness is to compare where we are in terms of GDP today relative to historical trend growth, something we did in a previous post. It is clear that one of the main drivers of this weakness is the tepid recovery in consumer spending since the Great Recession. We made note of this fact in another previous post, but we are certainly not alone in noticing this fact.

Our book, House of Debt, makes an evidence-based case for what caused the severe Great Recession and what explains the continued economic weakness. The debt-fueled housing boom artificially boosted household spending from 2000 to 2006, and then the collapse in house prices forced a sharp pull-back because indebted households bore the brunt of the shock. The lack of policies targeting this problem exacerbated the effects of the housing crash on consumer spending.

The BEA released state-level personal consumption expenditure data today, and it strongly supports our view. In the charts below, we take the 20% U.S. states that had the largest decline in housing net worth from 2006 to 2009, and we compare . . .

Read more »

SOURCE:   http://houseofdebt.org/

 

ABOUT US

Atif Mian is professor of economics and director of the Julis-Rabinowitz Center for Public Policy and Finance at Princeton University.

 

Amir Sufi is the Chicago Board of Trade Professor of Finance at the University of Chicago Booth School of Business and co-director of the Initiative on Global Markets.

 

“Atif Mian and Amir Sufi, our leading experts on the macroeconomic effects of private debt, have a new blog—and it has instantly become must reading.”—Paul Krugman

1 reply

  1. Imran Khan finds out Atif Mian is Ahmadi Muslim and goes all out against Ahmadiyya ,,, (google it!)

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