Stephen Gordon has some really nasty looking diagrams explaining just what a balance sheet recession looks like:
I had never heard the expression “balance-sheet recession” before this recent episode, and it’s time I got around to a comparison of the household balance sheets of the US and Canada. Of all my “Canada is not the US” posts, this is the one that makes me most grateful.
The quarterly data goes back to 1990, and it’s good to put the last few years in context. I’ve scaled all the series by price (the consumption spending deflator) and population. Here is the net worth series:
There’s been talk of a Japan-like ‘lost decade’ in the US; that seems optimistic. US real per capita net worth is back to what it was back in 1999.
More (and somewhat scarier) diagrams at the original post. It doesn’t even finish on a high note:
The US data go back to 1952, so I was able to check the last time the real, per capita value of US housing equity was at its current level. Even after looking at all of these graphs, the answer astonished me: 1978. Nineteen seventy-freaking-eight.
