House of Cards? Concerns Mount Over Rising Household Debt

The video explores the relationship between household debt and economic performance, highlighting that a rapid increase in household debt often precedes slower economic growth. This pattern is not only evident in the 2008 recession in the US but also historically across many advanced economies. The discussion extends to various countries, including Scandinavian nations, Japan, and China, emphasizing the global relevance of this issue. The video further explains the mechanism by which high household debt impacts the economy, focusing on fluctuations in aggregate demand and the challenges economies face in substituting demand once the borrowing cycle ends.

What are the implications of high household debt on aggregate demand?

What challenges do economies face when household debt rises and then stagnates?