According to many experts, the economy is at risk of collapsing under the enormous weight of consumer debt. This theory holds that homeowners owe so much money on their mortgages that it’s just a matter of time until they have to cut back on their spending, default on their payments, or both.

It’s true that mortgage debt has increased in recent years. Since 2000, it has gone up by more than 10 percent each year, far outpacing household income, which has only climbed by 4.5 percent a year. And the disappointing performance of the stock market hasn’t helped.

Even when we factor in the impact of soaring real estate values, which have increased by nearly 8 percent a year, household net worth has risen by only 2 percent a year.

But the situation is not as gloomy as it seems. Despite rising mortgage debt, Americans have $55 trillion in total household assets, such as real estate, bank accounts, stocks, bonds, and mutual funds. This is five and half times the total household liabilities of $10 trillion.

Another positive sign is that, even after the frenzy of refinancing and the popularity of home equity loans, Americans hold 55 percent of the equity in their homes. This is almost the same level of home equity ownership that people held at the peak in 2000, when the level was 57 percent.

While borrowing has increased, it has not spiraled wildly out of control, as some news reports would have you believe. In 1997, household liabilities were 96.5 percent of after-tax household income. Today, they have only gone up to 115 percent. However, in any normal business sense that’s hardly poor debt coverage, as Milton Ezrati, senior economic strategist for Lord, Abbett & Co. LLC, recently pointed out in an analysis.

If we look even closer at household liabilities, the situation looks even better. While mortgage debt has gone up, other borrowing hasn’t risen significantly. For example, consumer credit is up only 4.5 percent a year, which is the same rate at which household income is growing.

What this means is that instead of maxing out their credit cards and paying 20 percent interest on their unpaid balances, people are borrowing against their home equity or paying down their mortgages at 5 percent. Because of the tax benefits of mortgage debt, the burden of debt service on after-tax income is actually dropping – from 15.5...