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Nice graph. Looks like all those valleys in the 70's, 80's and 90's came during times of high unemployment and recession. I don't see the doomers effectively making the case that we're in a time of recession or that unemployment is high -- or rapidly increasing -- unless you consider 3.5% annualized GDP growth and 4.4% unemployment proof of a recession. You'd also have to explain away the fact that corporate pre-tax profits are up 31% through the third quarter, real consumer spending is about 3 percent above the third-quarter average annual rate and the overall consumer price index has fallen to 1.3% over the past year. 30-year mortgages can still be had for 6% and projections show continued growth for our economy.

No, this time you say it's different because people are buying homes with mortgages they can't afford and once all those unaffordable mortgages catch up with them, doom will certainly befall us resulting in economic collapse. (and gold skyrocketing to $1,650 and ounce, or more!)

Figure 2 shows the distribution of property debt burdens for two years, 1995 and 2004. Notably, the distribution has shifted slightly towards higher debt burdens over this period. However, this shift is small enough that the 1995 and 2004 distributions remain similar. As in every year since 1989 a majority of households that had property debt in 2004 devoted less than 20% of their incomes to servicing that debt.

What we do know from the data is that the share of households with high debt burdens is similar now to what it has been in past years. In 2004 about 5.5% of households with property debt had debt burdens over 0.50, roughly similar to the fraction in earlier survey years.

Figure 3 shows the 2004 distribution of households' home debt burdens by whether or not they have an adjustable-rate property loan. It seems that holders of adjustable-rate loans fit almost exactly the same pattern as other households. They are more likely to have debt burdens in the range of 0.2 to 0.4, but all the differences are small. These statistics suggest that most households that use adjustable-rate loans are not using the lower interest rates to fund insupportably large debts.

I realize that this information is only through 2004 and that in 2005 the use of adjustable-rate mortgages increased thereby increasing total mortgage debt. However, can the doomers here show us that these changes have affected the distribution of debt burdens and that this increase in adjustable rate mortgages will lead to economic collapse? Even though the use of adjustable-rate mortgages has increased, where is the proof that just because households have some of their property debt in adjustable-rate mortgages that they have high debt burdens, and can't adapt successfully to higher interest rates. The trends identified above would indicate that most consumers have a lot more money and sense than doomers here give them credit for.

As the chart below shows, the added debt from those loans has barely impacted our median property debt burden through 2004.

Federal Reserve Bank of San Francisco

don't see the doomers effectively making the case that ... .... 3.5% annualized GDP growth and 4.4% unemployment proof of a recession

I kept laughing at that line so much I couldn't finish the post until I though about how doomers are so unable to imagine Americans being off.

The US has made so much progress realizing the dream of home ownership. I was looking at the Flow of Funds stats I got from the fed link that Remember shared. By taking the total real estate + mortgages, adjusting for inflation, and dividing by no. households --we get a truly inspiring picture of wealth creation.

Doomers actually know about this stuff, but what they push is the part about the real mortgage "burden" going to an all time high. They won't look at the increased equity position; they're the kind of people who'd rather own a $100 home with $1 debt, than have a $1,000,000 home with $10 debt.

I didn't have to go far to answer you questions. First, I am of the firm belief that both the GDP and the CPI are manipulated. Our GDP is actually much lower, and the CPI is actually much higher. Rather than wasting time trying to prove this to you, I suggest you consult the following links:

http://www.financialsense.com/stormwatch/2005/0624.html

http://www.shadowstats.com/cgi-bin/sgs

Also, all your rosy charts, graphs and analysis come from the San Francisco FED. And you acknowledge that you are aware that the data you used is only good through 2004, and that in 2005 "the use of adjustable-rate mortgages increased thereby increasing total mortgage debt." So you acknowledge debt has increased after the time period you indicated. Not only that, since you are relying on the FED for your rosy picture, you should know that the St. Louis FED came to the exact opposite conclusion for the exact same time period you selected:

"The findings of the latest Survey of Consumer Finances show a modest slowing in the growth of real median household income and net worth from 2001 to 2004, compared with 1998 to 2001, but larger increases in the growth of household debt. At the same time, consistent with previous surveys, nearly half of all families did not save any portion of their income over the previous year. Over time, this is expected to become a serious liability for those families."

http://www.stlouisfed.org/publications/re/2006/c/pages/digging.html

You might also want to consult the following from the St. Louis FED re: home appreciation not being a substitute for savings:

The Bottom Line: Rising Household Asset Values Do Not Substitute for Saving

"So what about the reported increase in value of households’ assets minus their liabilities—equivalent to 42 percent of disposable income during 2005? Much of this 'wealth gain' was the result of incomplete accounting. For example, appreciated housing values actually are canceled by the unrecorded, but very real, increased cost of living in the houses. Another portion of increased household assets corresponds to changes in the prices of stocks, which go up and down much more from year to year than the underlying economic value of the capital stock they represent.8"

"The dismal conclusion of this exploration of saving and wealth concepts is that, while neither the personal saving rate nor the flow of funds measure of household net wealth is perfect, the long-run declining saving trend probably better represents the underlying economic reality. Rising household asset values by themselves provide an incomplete and misleading picture and should not encourage us to ignore the danger signal associated with low rates of saving and investment in our future prosperity."

http://www.stlouisfed.org/publications/re/2006/c/pages/digging.html

All of this during the very time period you selected. Things have only gotten worse since then. In short, your "rosy" picture is anything but rosy. The trade and budget deficits continue to grow. The CPI and the GDP are skewed to paint a rosy picture over an economy that is rapidly sliding into what will ultimately be a deep recession. Household income is declining while household debt has been increaseing for decades (and now represents almost 100% of GDP). Real Estate represents a huge percentage of household wealth and is now in serious decline. Quite simply, Americans are tapped out...and they have zero savings to fall back on. Got gold?