A new report from RBC Economics shows that the popular perception that North American households are veering towards disastrous debt levels is totally unfounded.

The report says that the biggest risks for households relate to housing and auto demand, and how rapidly households redeploy their investments.

“The prevailing outlook on North American household finances underestimates employment, personal income and productivity growth,” said Derek Holt, assistant chief economist, RBC Economics, in a release. “While there is room for caution, too much emphasis is being placed on highly flawed measures and misled beliefs that overstate the risks to the economy.”

The report notes seven widely held myths about North American finances:

  1. North American households are in over their heads in debt.
  2. Consumer bankruptcies keep getting worse
  3. Growth in revolving credit products is a problem.
  4. Households will be in trouble when interest rates rise.
  5. Households are not saving enough.
  6. Households are frivolously spending their home equity.
  7. Falling equity prices hurt credit quality.

    The full RBC Report is available at www.rbc.com/economics/market/pdf/myths.pdf.