Fed chairman says rising home prices cushion debt burden, consumers in generally good shape.
February 23, 2004: 9:56 AM EST
WASHINGTON (Reuters) - Federal Reserve Chairman Alan Greenspan said Monday that U.S. consumers seemed in generally good financial shape, able to carry more debt comfortably because they are cushioned by rising home prices.
"Overall, the household sector seems to be in good shape," Greenspan said in prepared remarks to the Credit Union National Association.
"Much of the apparent increase in the household sector's debt ratios over the past decade reflects factors that do not suggest increasing household financial stress."
Greenspan noted that debt-to-income ratios have been rising for half a century and noted the ratio of net worth to income was currently higher than its long-run average because household assets were rising as well.
"So long as financial intermediation continues to expand, both household debt and assets are likely to rise faster than income," he said, but added that did not necessarily imply a heavier debt burden.
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