A closer look at US corporate and household balance sheets

US banks are mostly healed and consumers exhibit willingness to borrow again

May 3, 2018 | John Greenwood

Following over eight years of balance sheet repair since the crisis of 2008-09, US household and financial sector balance sheets have healed substantially. Deleveraging is largely completed for these two sectors in absolute terms, but not relative to GDP.

Private sector - US banks are mostly healed
Although US banks are healthy again, following two years of buoyant bank lending (2014-16), loan growth has slowed since October 2016. Securitization markets and shadow banking activity are still broadly flat, not expanding.

The non-financial corporate business sector, which did not become over-leveraged before the crisis, has taken advantage of low interest rates to increase its borrowings since 2009. While the debt ratio has risen to 72% (equal to the peak in 2009), corporate earnings are now much stronger, enabling companies to repay this debt more easily.

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