A few things. If some economist shows you this chart from 2004, then they are likely missing the point.
The debt rose 3 points as a percentage of disposal income. Only one point of that was in the run up to 2009. We had the same rise in 1996 but the resulting recession was mild and almost revised away.
Is there some hard limit? I doubt it, the tolerance to interest charges will likely be spread considerably. Note the tolerance for interest charges dropped considerably, the consumer plans to remain permanently delevered it seems.
What might have be associated with the sudden collapse? Hmm... Here is a modified chart.
I can see a sharp coincidence, but then why did it start?
Well, the higher real growth during the Bubba Clinton regime might be a place to start looking. There is a bump in growth at the time.
But, the point is, one cannot look at one recession cycle and claim equilibrium. Doing so is fraud. Household debt collapse came as the crash happened, and is unlikely the cause. Failure of the consumer happened as the layoffs began. Nor did household debt ever recover in the face of oil prices, then covid hit us.
Nor did retail banking ever recover. The bankers essentially abandoned much of that market, and will soon abandon another chunk of that market. The burden of bailouts gets passed onto the consumer. There is no demand impulse from government, that concept is and was horse manure.
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