Households look to get debt under control

The average household debt to income ratio fell sharply in the December 2008 quarter from 160% to 156%, as people paid down their cards and loans.

Merrill Lynch economist Peter Osbourne said that the debt to income ratio would need to fall further to about 140% before there would be a significant pick up in borrowing and spending. "The ratio needs to fall significantly over the next two to three years to return household balance sheets to a healthy state."