American Households Are Not “Loading Up On Debt”

From Reihan Salam’s suggested speech for Mitt Romney:

Two things are happening. The first is that after a brief uptick in the savings rate after the crisis, the savings rate is once again trending downward. American families are loading up on debt to make up for an economy that isn’t growing fast enough. The second is that American companies are finding customers overseas, in fast-growing countries where poverty-stricken populations are making their way into the middle class.

Here’s debt service payments as a share of disposable income:

But is that just a question of ultra-low interest rates? Well, the household debt as a share of GDP dataset in the FRED database doesn’t go back very far, but:

I think it’s safe to say that families “loading up on debt” is not what’s driving recovery winter. It’s true that consumer credit is expanding, but the credit used to buy automobiles becomes the income of the people who make the automobiles. An expansion of the overall quantity of credit is simply another way of describing what economic growth looks like in a modern economy. If the debt is growing faster than incomes, then you have a sustainability problem. But it’s not.