Personal Wealth Management / Video Commentary
Fisher Investments Reviews Concerns About Rising Consumer Debt
Fisher Investments’ founder, Executive Chairman and Co-Chief Investment Officer Ken Fisher discusses his views on the current state of consumer debt. While consumer debt levels have risen, that’s only part of the story. Ken thinks it’s important to look at the overall health of consumers’ household balance sheets—measured by personal debt relative to personal assets—which are almost as strong as they’ve been in recent decades. According to Ken, consumers have largely been more conscious about managing their personal debt as fears around government debt have steadily risen over time. Unless household balance sheets degrade meaningfully, Ken doesn’t believe higher consumer debt levels should derail markets.
Ken Fisher: So whenever I conduct one of my firm's client seminars, I'm always asked about debt in various forms. And is it a problem here now, in the future? And one of those is about consumer debt. Is the consumer overloaded? And should you worry about consumer debt? So there's two ways to think about that. Should you worry about consumer debt? Maybe you should about your own consumer debt, depending on what your circumstances are and I can't speak to that. But of course, everyone needs to keep their own house well tended.
When we think about our culture. However, let me just be crystal clear that the American consumers overall balance sheet, even though total debt levels are up. The consumers overall personal balance sheet debt versus personal assets is actually better and stronger than it's been not over the last year. The last year has been a little bit worse, but overall better than it's been ten years ago or 20 years ago or 30 years ago or 40 years ago.
The fact is, as there's been ever more fear and I just want you to think about this for a second, as there have been ever more fear about government debt. Consumers have become more prone to manage their own debt more carefully. Not everyone, of course. There's always somebody out there getting in trouble. But overall. Assets have risen for consumers faster than their debt has and while debt goes up, the balance sheets of America in the consumer sector and actually, for that matter, in the corporate sector, have gotten better and better and you shouldn't worry about them only about yourself.
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A series of disclosures appears on the screen “Investing in Securities involves a risk of loss. Past performance is never a guarantee of future returns. Investing in foreign stock markets involves additional risks, such as the risk of currency fluctuations.The foregoing constitutes the general views of Fisher Investments and should not be regarded as personalized investment advice or a reflection of the performance of Fisher Investments or its clients. Nothing herein is intended to be a recommendation or a forecast of market conditions. Rather it is intended to illustrate a point. Current and future markets may differ significantly from those illustrated here. Not all past forecasts were, nor future forecasts may be, as accurate as those predicted herein.”
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