The resulting drop in the average interest rate on household debt, combined with the increase in after-tax income, has helped households stay current on their loan obligations. Indeed, delinquency rates on consumer and mortgage loans held by banks have been trending lower, and most other measures of household loan performance have been stable on net this year.
Businesses Capital spending by businesses increased at an annual rate of 7-1/4 percent in the second quarter, and orders and shipments of nondefense capital goods - a key indicator of equipment spending - rose briskly over the June-to-August period. Moreover, the tenor of anecdotes from the corporate sector seems more upbeat, as corporate managers see sales picking up and the financing environment improving.