      led some to argue that the US balance sheet recession was
over.  Koo refers to this chart to make his point (click to
enlarge):  The white bars are financial assets and the red bars
are liabilities. The blue line is the difference between the
two. Koo again:  While US households did indeed run a financial
deficit in Q3, the deficit was not necessarily driven by
positive factors. If people who had been paying down debt to
repair their balance sheets had actually resumed borrowing, it
would mean that balance sheet problems were behind us. However,
the fact that the latest colored bar in Figure 1 is above zero
indicates that US households are still paying down debt.   And
the implications…       I know the plural of anecdote is not
data, but I’m not hearing a lot of optimism in the cohorts I’m
in contact with. Most people are less freaked out than they were
in 2009 and 2010 but while you can say that trend-wise, it’s an
improvement in confidence, that does not translate into
confidence in the animal spirit