Household Debt numbers are out for the 4th quarter, and they continue to look expansionary. This is a necessary development if momentum is going to carry us beyond QE3. Here are some graphs (I exclude student loans). The bottom is clearly behind us now:
Here is the cumulative change, in dollars, since 2010, by category. This makes it clear how much mortgage debt dwarfs all the other categories. Also, all categories, except Home Equity, are growing now. And, all of them are accelerating.
The acceleration is clear in the aggregate Q/Q growth rate, also. Q/Q growth is now back to the range of a healthy economy. The question now is whether it stays there or continues accelerating so that we get some bounce back growth that is higher than normal.
QE3 has been adding just under $1 trillion in deposits to bank balance sheets per year, and it looks like household credit is setting up to increase at at least that pace this year. A question I have had for this year is whether banks are healthy enough to pick up the slack from the QE3 taper. This report suggests that the answer is yes.