The ratio of household debt  2  BIS central bankers’ speeches  to disposable income has been declining after rising sharply during the bubble period. Although the ratio remains at a high level, it is converging toward the trend line.
If the recent rise in housing prices continues, the balance-sheet problem is expected to ease, leading to more vigorous household spending activity due to the wealth effects. The U.S. economy has been confronted with a very serious problem of the fiscal cliff.