[WestRace]

Originally Posted by chassis

No debt problem for the consumer or for corporations. What I see is a deceleration of growth to trend, coming from a 2018 growth level that was above trend. At-trend growth is "good" and "normal" and "sustainable".

The non-problematic December 2018 blip in the first FRED chart is now a thing of the past with the stock market recovery since Q4 2018.

https://fred.stlouisfed.org/graph/?g=nnvh

https://fred.stlouisfed.org/graph/?g=lPgA

https://fred.stlouisfed.org/graph/?g=lLpv

"Credit Market Debt as a Percentage of the Market Value of Corporate Equities"

I think the problem is the equities (I assume it's mostly stock valuation) are overpriced so this measured may be misleading.

For example, if a corporation has a certain amount of debt. If their stock price is high enough then the debt/equity is rather reasonable. But the stock values are so volatile so in a downturn, their stock values will go down so the debt/equities will get worse. A lot of corporations used the 21% rate to buy back stocks which somewhat distort the true valuation of the corporation. So it potentially could lead to a downward spiral and hence a crash which is what people are concerned.

Sometimes it's easy to make the wrong assumption looking at data from a static standpoint but the variables keep moving and the domino affect can be difficult to predict. I think the FED may have seen that and they decidedly took a much more dovish tone not to freak out the market.

Back in the 2008 crash, it's the consumer that was overly leveraged. The consumers seem to be fine now.