A Better Balance Sheet for Consumers

Household debt service as a percentage of disposable personal income must be off the charts, right? Isn't that the most telling statistic of the strapped consumer?

Oops! The Federal Reserve Bank of St. Louis put out the new figures yesterday, and in 2007, there is a decline in household debt. The balance sheet is getting better out there.

This story is astonishing -- not just for its defiance of conventional wisdom, but for its obliteration from the news pages. Have you read it? I had one of my most reliable sources send it to me. It was an "A-ha!" moment because it explains why retail hasn't fallen off a cliff, why Wal-Mart (WMT - commentary - Cramer's Take) may have truly bottomed (I like that stock even though it did not tackle the strike) and why Target (TGT - commentary - Cramer's Take) is still cruising. It could be a reason why Sears (SHLD - commentary - Cramer's Take) isn't falling apart, either, despite projections that it may be.

No, that doesn't mean you should go buy Best Buy (BBY - commentary - Cramer's Take) ahead of the quarter -- too much turmoil out there. But it might be a reason to buy Darden (DRI - commentary - Cramer's Take) ahead of next week and to bet that the mainstream department stores, like J.C. Penney (JCP - commentary - Cramer's Take) and Macy's (M - commentary - Cramer's Take) may be worth examining.

It could also be behind the surge of J. Crew (JCG - commentary - Cramer's Take), Guess (GES - commentary - Cramer's Take), Polo Ralph Lauren (RL - commentary - Cramer's Take) and VF (VFC - commentary - Cramer's Take), all of which have been terrific.

Or of an Apple (AAPL - commentary - Cramer's Take) or a Garmin (GRMN - commentary - Cramer's Take), both of which have expensive product offerings, not to mention Harman (HAR - commentary - Cramer's Take), which is, of course, going private.

So, when you are fretting about that minor scrap up in interest rates this week, don't just examine the Fed's balance sheet. Consider that of the consumers: It peaked last year and has been going down since!

Random musings: Some debate is raging on Stockpickr about Cliff Mason and his controversial spend-over-save initiative. Wow, is that a hot button.

At the time of publication, Cramer was long Sears.

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