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The Real Signal Midweek - High Rates Are Not A Problem For Households

Sep 13, 2023

High Rates Are Not A Problem For Households

“Despite high debt levels and high rates… actual interest expense to households is still near multi-decade lows…

Corporate balance sheets will be a bit more exposed given the use of floating rate debt and shorter maturity debt (especially for non-IG borrowers). We are already seeing some issues there which will get worse if top line revenues/earnings/cash flow deteriorate with a weakening economy. At that point house house would be indirectly impacted as business cut costs, and ultimately jobs.”

Scott Choppin Note: Most household debt is fixed rate mortgage debt with long term time horizons. For the average household that rate is around 3% notwithstanding the actions of the Federal Reserve.

Source: @HayekAndKeynes on x.com