U.S. Consumers are Okay

The IMF’s Finance & Development quarterly has an interesting piece arguing that the U.S. consumer is in better shape than he/she might seem:

“…the balance sheet of the U.S. household sector still looks robust, partly as a result of the equity market upswing since mid-2003, and households appear to have used mortgage refinancing in part to insulate themselves from possible interest rate increases. Finally, although household exposure to the real estate market has grown, and there are signs of possible overheating in major urban markets, aggregate housing prices do not appear so far out of line with macroeconomic fundamentals that an orderly return to equilibrium cannot be achieved.”

While the following figure isn’t the whole housing argument, it is worth pondering: